Trump says he'd be OK with a bailout that prevents companies from using cash on share buybacks - and claims he was 'never happy' with them in the past
- President Donald Trump said on Thursday that he'd be okay with prohibiting companies that receive federal assistance during the coronavirus pandemic from using that money for stock buybacks in the future.
- He added that he was "never happy" with companies using large amounts of cash for stock buybacks.
- The White House and Congress are currently working to iron out the details of a more than $1 trillion stimulus package to aid economic fallout amid the coronavirus pandemic.
- US airlines have asked for $54 billion in aid from the government amid the outbreak. In the last decade, major carriers used 96% of available cash for share repurchases.
- Read more on Business Insider.
President Donald Trump said on Thursday that he'd be amenable to prohibiting companies that receive federal assistance during the coronavirus pandemic from using that money to repurchase their own stock in the future.
"Some companies as you know did stock buybacks and I was never happy with that," Trump said during a press conference at the White House. "It's very hard to tell them not to but I would tell them not to."
He continued: "It takes many many people in this case to tango, but as far as I'm concerned conditions like that would be okay with me."
The White House and Congress are currently working to iron out the details of what could be a more than $1 trillion stimulus package to mitigate economic fallout amid the coronavirus pandemic.
The plan will likely contain money for industries hit hardest by the outbreak as consumers are asked to stay home to curb the spread of the virus. US airlines have asked the government for $54 billion in aid in both grants and loans from the federal government.
Over the past decade, many major airlines including Delta, United, and Southwest have used as much as 96% of their cash flow to repurchase their own stock, Bloomberg reported. When companies buy back their own stock, it tends to increase share price by boosting earnings per share.
If those companies had not spent so much on share repurchases, they might be in a different position today. A number of lawmakers have called for a ban on stock buybacks as a stipulation of any bailout money.
"If there is so much as a DIME of corporate bailout money in the next relief package, it should include a reinstated ban on stock buybacks," wrote Rep. Alexandria Ocasio-Cortez, D-NY, on Twitter. Sen. Elizabeth Warren, D-Mass, and Sen. Rick Scott, R-FL, have also spoken out against stock buybacks.