Corporate America Reaps Egregious Sums | The CARES Act

Corona Virus Aid and Relief Economic Security Act

The Trump administration's response to the COVID-19 pandemic and the almost complete shuttering of the global economy has been rather predictable. Let's throw more money at the problem and hope that everything goes back to normal.

Unfortunately, it ignores a stark reality that many of us refuse to face, that the system itself has long been paralyzed by corruption and fraud. We're witnessing an economic disaster that has been facilitated by the takeover of the US political system by private interests through corporate capture.

The response to the crisis has been an unprecedented near complete shutdown of the US economy. Tens of millions have already filed for unemployment insurance and congress has rushed through an emergency stimulus package, the CARES Act, in order to provide financial relief to Wall Street, Main street, small businesses, local and state governments as well as support designated for education. Officially, the CARES act provides approximately $2 Trillion in financial assistance, yet others estimate that the true amount of economic stimulus to be closer to $7-$10 trillion dollars.



Donald Trump and his appointed US Treasury Secretary, Steve Mnuchin, have announced immediate relief for all qualified Americans who will receive a frivolous amount in the form of a cheque for $1,200.00 USD.

At first glance it would appear that American workers will receive the largest amount of stimulus support. However, with absolutely ZERO oversight of the program it's ripe for fraud, mismanagement and outright theft.

Our first clear indication is the announcement by the US Treasury to handover the distribution of the massive stimulus package to none other than the Wall Street monstrosity - BlackRock.

BlackRock

BlackRock manages an estimated $6.5 trillion in global assets earning a revenue of $14.5 billion in 2019. The firm is one of the leading investors in many of the worlds's largest and most powerful corporations across multiple industries including banks, oil, pharmaceuticals and tech.


statista



Of special note, the company is a major investor in the gas and oil industry. The company has come under increasing pressure from environmental advocacy groups for there heavy investments in oil companies that threaten the destruction of the Amazon rainforest in Ecuador, Peru and Colombia.

gizmodo

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Beyond Conflict of Interest

On March 24th 2020, the FED announced that BlackRock would be tapped to help manage three key aspects of the stimulus deal.

1. Primary market corporate credit facility
2. Providing new bond and loan issuance
3. Secondary market corporate credit facility
   (providing liquidity for unsettled corporate bonds)

As per the agreement, BlackRock stands to earn a very low sum from the government in exchange for their assistance in overseeing stimulus loan allocations. According to Reuters News Agency, BlackRock's maximum potential earnings in the program amount to only $7.75 million USD annually.

For the world's largest asset management company this is a minuscule amount for taking on the incredible responsibility of restoring stability to the US and global economic system.

Is it possible that BlackRock is stepping in to save the world economy due to a sense of altruistic duty? Or out of patriotic allegiance?

Or, could there be another powerful motivating factor behind their service?

Critics of the plan argue that BlackRock's involvement with the US Treasury stimulus package is a total farce. As Marcus Stanley of Americans for Financial Reform told Matt Taibbi in a resent Substack article "Resetting the Bomb":

“’Conflict of interest’ is kind of a quaint 20th-century term to describe the BlackRock arrangement.”

Substack

As a matter of fact, multiple groups have cried foul as the agreement plainly demonstrates that the plan lacks any form of controls and oversight which may ultimately lead to limitless public funding for the private sector and monopolistic concentrations of financial power.

Several groups, including Public Citizen and the Sierra Club released a joint letter underlining their concerns following the Trump administrations announcement on March 27th. The letter warned that the arrangement with the private equity firm BlackRock threatened to "harm the public good".

"By giving BlackRock full control of this debt buyout program, the Fed is further entwining the roles of government and private actors," the letter said. "In doing so, it makes BlackRock even more systemically important to the financial system. Yet BlackRock is not subject to the regulatory scrutiny of even smaller systemically important financial institutions."

"BlackRock is the largest owner of many of the firms over which it will make decisions," the letter said. "As a shareholder in nearly all companies, BlackRock stands to benefit from the propping up of certain companies and industries.

Pensions & Investments Online


Herein lies the answer to why BlackRock has been selected for this role.

It's the companies in which the Wall Street juggernaut is heavily invested in that will reap the benefits of the stimulus allocated by BlackRock itself.

It also helps to explain why the corporate media has attempted to play down the firm's involvement with multiple outlets reporting that BlackRock stands to earn less than $8 million for their participation in the loan program.

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US Treasury Secretary - Additional $250 Billion in PPP

PPP - Paycheck Protection Program

US Secretary of the Treasury, Steve Mnuchin, announced the latest round of stimulus on April 8th adding an additional $250,000,000,000.00 USD intended for small businesses.

Essentially, the purpose of SBA (Small Business Association) loans are to help businesses keep their workforce employed during the COVID-19 crisis.

On the surface, it seems the US government is increasing aid to working class and middle class Americans by providing more assistance to small businesses.

After the president signed the CARES Act into law, on March 27th, congressional leaders made sure to clarify that those receiving direct loans would not be able to use the stimulus money for stock buybacks, CEO bonuses or to pay stock dividends.

Yet, once more, the devil is in the details.

The provisions to prevent stock buybacks apply only to 'direct loans' and may not apply to affiliates.

There are countless other ways for companies to get money in this rescue. It appears a corporation that issued bonds and sold them into the Fed’s giganto-buying programs could take the proceeds of those sales and buy its own stock, for instance.

Reporting on the numerous possible loopholes baked into the CARES Act, reporter Matt Taibbi details a long list of concerns.

• Banks set to receive 1-5% on 100% guaranteed government loans
• Bank stalling tactics present on the 1st day of loan
• SBA notoriously slow to act
• Potentially tens of billions in outright fraud (+ Savings and Loans fraud)
• Of the $377 Billion for small businesses - thousands of fraudulent claims
• Employers taking money meant for payrolls + hiding layoffs
• Impersonations of bailout agencies defrauding the public
• Taking of $10 of billions of bad investments off the books of corporations

The list of potential fraud and abuses is a long one.
Furthermore, Taibbi writes that he worries:

money will not get to employers quickly enough, or at all. A program with similar conception after 2008, the HAMP mortgage relief plan, closed up shop after providing very limited real-world aid. That shouldn’t happen this time, but there are a lot of steps between the pile of government cash and the millions of non-finance-sector human beings who need it.

Substack

At this point, it's almost a given that the Orwellian named CARES Act solutions to the COVID-19 rushed through by congress and quickly written into law by the Trump administration will predominantly benefit the wealthy and the private sector.

The lack of any oversight is the primary feature of the CARES Act and a way for the private sector to gorge itself on public funds. Corporate America has seized the opportunity to hide the fragile and already hollowed out economy which they have presided over for decades to reap even greater rewards.

Loopholes will be exploited by those in a position to profit off the crisis. Blue collar frauds will be reported on while enormous white collar crimes will be covered up.

The Act is designed to deceive by giving the public the impression that the ruling elite class and political class actually care about Main Street America.

Rest assured, they do not.

We only need to look at the lack of preparedness by the USG to the pandemic and the administration's myopic obsession with saving the stock markets above all else - including the health and well being of every American - to see what's coming in the weeks and months ahead.

Austerity, Surveillance, and Authoritarian rule awaits as the US political and economic system slips closer towards collapse.

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