Warren, Klobuchar, and Cicilline to Federal Reserve and Treasury: Ensure a Competitive Economy, Protect Small Businesses From Predatory Corporate Behavior During COVID-19 Pandemic
Lawmakers: "As small businesses struggle to stay afloat, they have become potential targets of large corporations seeking to exploit the crisis to increase their market power"; Under the CARES Act, the Federal Reserve and Treasury have the authority to restrict large corporations that receive bailout funds from engaging in potentially harmful mergers and acquisitions
Washington, DC -- United States Senators Elizabeth Warren (D-Mass.), Amy Klobuchar (D-Minn.), and House Antitrust Subcommittee Chairman David Cicilline (D-R.I.) urged the Board of Governors of the Federal Reserve System (Federal Reserve) and the U.S. Department of the Treasury (Treasury Department) to use their authority under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to restrict large corporations that receive bailout funds from engaging in potentially harmful mergers and acquisitions in order to protect small businesses and their workers, and to ensure a functioning, competitive economy.
"As small businesses struggle to stay afloat, they have become potential targets of large corporations seeking to exploit the crisis to increase their market power," the lawmakers wrote. "Small businesses help form the backbone of our economy, yet giant corporations are benefiting most from this bailout."
Economic concentration, particularly large mergers and acquisitions, often leads to major job losses, price increases, flagging innovation, and a decrease in start-ups and entrepreneurship. Increasing corporate power also results in higher profits for fewer companies, while those companies pass less and less of those profits down to their workers. Recent mergers and acquisitions have led to thousands of layoffs.
In passing the CARES Act, Congress voted to protect American workers and companies from the devastating economic impact of this pandemic, not to finance corporate acquisitions by the very large firms best positioned to weather this crisis. The CARES Act gives the Treasury Department the discretion to impose conditions on companies receiving bailout funds, and the Federal Reserve has the discretion to impose conditions on the eligibility of corporations to participate in lending programs funded with CARES Act money.
"The American taxpayer should not be financing opportunistic corporate deal making. As painful as this economic crisis already is, the Federal Reserve and the Treasury Department must use their full authority to ensure that predatory corporate behavior during the pandemic does not make our long road to recovery even more painful," the lawmakers concluded.
Senator Warren introduced the Pandemic Anti-Monopoly Act with Congresswoman Alexandria Ocasio-Cortez (D-N.Y.) to impose a moratorium on large and other harmful mergers during the crisis. Senator Warren has also sent a series of oversight letters urging the Treasury Department and the Federal Reserve to use their authority to impose conditions on bailout recipients.
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