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A draft copy of the massive $2 trillion Senate coronavirus rescue package expected to be passed on Wednesday would bar companies receiving federal loans from stock buybacks for one year after the loan is paid back.
The bill authorizes $25 billion in loans to passenger air carriers, $4 billion to cargo air carriers, and $17 billion for “businesses critical to maintaining national security.” It also authorizes up to $454 billion in loans to other eligible businesses otherwise unable to receive credit.
The legislation would also bar large companies from paying dividends to shareholders for one year after the loan is paid back, and from reducing their employment levels by 10% until the end of September. Midsized companies would be barred from paying dividends while the loan is outstanding.
In addition to loans, the legislation also authorizes cash grants to those in the airline industry. It calls for $25 billion in grants for passenger airlines, $4 billion for cargo carriers and $3 billion for contractors.
The grant conditions call for a pause on dividends and buybacks through September 2021 and a pledge to “refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020.”
Liberals and some high-profile conservatives expressed support for conditions on taxpayer assistance to companies hit by COVID-19. President Donald Trump, during a White House news briefing last week, said he supported such a provision. Sen. Elizabeth Warren, a former Democratic presidential candidate, contended that bailed-out firms should be barred from conducting buybacks permanently.
The text of the legislation will have to be finalized and voted on by the Senate, approved by the Democratic-controlled House of Representatives and signed by Trump before becoming law.
The Senate is expected to take up the legislation later Wednesday. The House is unlikely to vote on the matter until Thursday.
— CNBC’s Kayla Tausche contributed to this report.