WASHINGTON – Texas Senator Ted Cruz defends his will to ensure that oil and gas companies, including one owned by two of his biggest political donors, can tap into a Federal Reserve loan program designed to help businesses to overcome the coronavirus pandemic.
The Republican’s efforts have come under scrutiny in recent days after The Wall Street Journal reported that Texan billionaires Dan and Farris Wilks, Cruz’s main backers, invested heavily in other energy companies at the same time their company received a $ 35 million relief loan.
A watchdog group that tracks pandemic assistance criticized the arrangement. But Cruz said it was “misleading” to suggest he was weighing “on behalf of a specific business”.
The senator – while not addressing the specific scenario involving the Wilks brothers, who are prolific donors to the GOP – noted on Twitter that he “sent a public letter to the Fed arguing that ALL of the oil industry and gas should not be wrongly excluded from emergency loans. . “
“It wasn’t in secret,” said Cruz, sharing a link to an April press release on his letter to the Federal Reserve. “My job is to fight for 29 million Texans, and when the Fed accepted my public letter, it saved over 300,000 energy jobs in Texas.”
1/2 This tweet is misleading. I did not “weigh in” on behalf of any particular company. I sent a public letter to the Fed arguing that the ENTIRE oil and gas industry should not be wrongly excluded from emergency loans.
I am proud to stand up for jobs in Texas. https://t.co/m4O1UO3zRt
– Ted Cruz (@tedcruz) December 27, 2020
The episode again highlights how lawmakers’ efforts to boost struggling businesses amid the coronavirus outbreak have led to unusual results.
This dynamic has been most persistent in the separate Paycheck Protection Program, a forgivable loan program that Congress intentionally designed with flexible rules so that money flowed quickly to desperate small businesses affected by the fallout. economic aspects of the pandemic.
The Newspaper‘s the report now highlights the Fed’s Main Street Lending Program, which was put in place to deal with economic difficulties with a different approach.
Under the program, banks can provide business loans and then sell almost all of the loans to the Federal Reserve, speak Newspaper. The Treasury Department then covers the Fed on all unpaid loans, meaning federal taxpayers are the ultimate safety net, the Newspaper Explain.
But the oil and gas industry has expressed concern that the fund will not actually help them, even as the sector has been hit by the challenges of the pandemic, a price war between Russia and Saudi Arabia. and increased international competition.
Industry concerns included the program’s $ 25 million cap on loans and restrictions on the use of loans to repay or restructure debt, the Newspaper reported. The leaders of the oil and gas sector therefore turned to Congress for help, finding Cruz’s ready ear.
A spokesperson for Cruz said to Newspaper that the senator spoke to about 40 oil and gas companies, including the Wilks brothers, about the kind of help they need against the coronaviruses. These conversations led Cruz to ask the Fed to change the rules of the loan program to address industry concerns.
The senator “worked so that small and medium-sized enterprises directly affected by the economic impacts of this pandemic had access to emergency liquidity”, spokesman for Cruz, Lauren Bianchi said to Newspaper.
A few days later, the Fed complied.
The Fed has now bought nearly $ 830 million in loans from oil and gas companies, according to Bailout Watch, a nonprofit watchdog that tracks pandemic relief. The Newspaper focused on the Wilks brothers both because of their history as donors and their buying frenzy over the past few months.
In the months around the time Wilkses ‘ProFrac Holdings received a $ 35 million relief loan, the brothers’ businesses made or increased investments in at least six other companies, the Newspaper reported, citing corporate documents.
Spokesmen for the Wilks brothers made no comment to the Newspaper.
Chris Kuveke, analyst for Bailout Watch, told the Newspaper that “the ProFrac loan is a blatant embezzlement of taxpayers’ money.” He also criticized the Wilks brothers for giving Cruz millions of dollars in campaign money, saying “it’s hard not to make the connection.”
The Newspaper noted that Bailout Watch received funding from Climate Nexus, a group that advocates for clean energy.