News Roundups

Bribery tied to bailouts, fossil fuel bankruptcies and more

Daily news headlines about the stimulus and recovery from August 4, 2020.

Bailout Watchdog Presses Treasury for More Transparency

The special inspector general for pandemic recovery urged the U.S. Treasury Department to provide more transparency and quick access to documents regarding a loan to a shipping company that has already drawn scrutiny from another watchdog group.

In his first report, submitted Monday to the Senate Banking Committee, inspector general Brian Miller said his office had yet to receive documents related to the $700 million loan to YRC Worldwide Inc., the first business to receive funding from $17 billion in coronavirus relief set aside for national security companies.

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Fed policymakers call for fiscal support to save U.S. economy

The U.S. economy, battered by a resurgence in the spread of COVID-19, needs increased government spending to tide over households and businesses and broader use of masks to better control the virus, U.S. central bankers said on Monday.

The calls for increased government intervention came as U.S. lawmakers and the White House resumed talks on a new government relief package, including a possible extension of unemployment benefits that expired on Friday.

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Nuclear bailout tied to bribery scandal was years in the making

A $1 billion bailout for Ohio’s two nuclear plants that’s now entangled in a state bribery scandal had little support when the idea came up three years ago. It was all but dead until the spring of last year, when the new leader of the Ohio House stepped up with a last-ditch attempt to give the plants a financial lifeline.

But that’s all on shaky ground again after federal authorities accused the powerful Republican Ohio House speaker and four associates of orchestrating a $60 million bribery scheme involving corporate money secretly funneled to them in exchange for passing the bailout.

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Rescue of Troubled Trucking Company With White House Ties Draws Scrutiny

At a virtual congressional hearing in May, Senator Jerry Moran, Republican of Kansas, asked Treasury Secretary Steven Mnuchin for help. A struggling trucking company in his state was on the brink of collapse and needed government support.

Eager to assist, Mr. Mnuchin assured the senator that “we will look at that specific company and see what we can do and get back to you.”

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About That Next Bailout: One Big Lesson from 2009

The last time Washington debated how much stimulus to inject into a moribund economy, the mantra inside the White House was: The more, the better. It was 2009, the nation was reeling from the mortgage meltdown and President Barack Obama’s top economic adviser, Lawrence Summers—a physical as well as intellectual heavyweight—kept telling colleagues that worrying the government would spend too much money was like worrying he would lose too many pounds.

“There’s not much danger that I’ll become anorexic,” Summers quipped.

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Offshore Driller Fieldwood Energy Preps for Imminent Bankruptcy Filing

Fieldwood Energy LLC, an oil driller that operates in the Gulf of Mexico, is preparing to file for bankruptcy within days as it grapples with the prolonged slump in commodity prices exacerbated by the coronavirus pandemic, according to people familiar with the matter.

The impending bankruptcy, which would be Fieldwood’s second in two years, underscores the challenges facing the offshore sector, which is more capital-intensive and requires more equipment than onshore drilling.

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Denbury Resources cut staff ahead of Houston bankruptcy 

Plano, Texas-based Denbury Resources Inc. spent the years since the 2014 downturn trying to cut its costs, before it filed for bankruptcy in late July.

That meant the company had reduced its workforce by about 55% from its 2014 numbers - with the most recent reduction in May - by the time it petitioned the Southern District of Texas Bankruptcy Court for Chapter 11 protections, CEO Chris Kendall said in a declaration to the court. The company had also curtailed its capital spending, Kendall said.

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