The Trump administration asked the Federal Reserve to modify its Main Street Lending Program so that more US oil drillers qualify for loans meant for mid-sized firms being rescued from coronavirus (COVID-19)-induced hardships, Energy Secretary Dan Brouillette told Bloomberg TV.
The Energy Department was asked to “evaluate 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”, Brouillette said on Tuesday.
The US Treasury worked very closely with the Federal Reserve to adjust the lending program to enable the eligibility of energy companies, Brouillette added.
Oil companies have been among the worst hit by the pandemic, which has driven global oil demand down by about 30 percent and nearly halved US crude prices.
The Federal Reserve, which announced the lending program on 1 May, said in an earlier comment that it did not tweak the lending program to make it compatible for oil companies because, by law, it is not supposed to target specific sectors.
The Main Street Lending Program was established under Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary. The Treasury will provide $75 billion for the program using funds from the Coronavirus Aid, Relief, and Economic Security Act, with $600 billion of loans provided from the Federal Reserve.