Energy chief said administration asked Fed to expand lending for oil companies

The Trump administration asked the Federal Reserve Board to make changes to its lending program so that oil companies could qualify, Energy Secretary Dan Brouillette told Bloomberg TV Tuesday.

The expanded criteria to qualify for the Main Street Lending Program unveiled late last month closely matched requests from Sen. Ted Cruz (R-Texas) and an industry group for small and mid-sized oil producers who said financing was needed to save the industry from bankruptcy. 

But Brouillette said Tuesday the board also faced pressure from the administration.

He said he and Treasury Secretary Steven Mnuchin were asked by President Trump “to evaluate the programs that were passed by the Congress and ensure that there is access for these energy industries to those programs.”

“And that’s what we’ve done,” he said. “Secretary Mnuchin worked very closely with the Federal Reserve, we adjusted the program, the Main Street Lending Program, and made that program available to what we refer to as mid cap sized companies.”

The changes to the Main Street Lending Program irked some Democrats who said the administration was too eager to give assistance to the oil and gas industry.

“President Trump’s fossil fuel cronies lobbied and are going to take money that was meant to help businesses survive the coronavirus pandemic in order to bail themselves out of $200 billion in existing debt,” Sen. Ed Markey (D-Mass.) said at the time.

The expanded program will benefit a number of industries, but it also opens the door to companies in more precarious financial circumstances. The updated guidelines eased restrictions on borrowing for heavily indebted companies and also allows them to use the loans to refinance existing debts — a departure from the first set of criteria released by the board.

Brouillette said Tuesday the program would still have strict standards.

“What Secretary Mnuchin and I did was to identify those companies that really were impacted by COVID I mean, but for the COVID pandemic they would be strong,” he said, while companies on the verge of insolvency won’t qualify.

“Those companies are going to be excluded from these types of programs. And I think rightfully so.”