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CNN: Companies that binged on buybacks now seek bailouts from taxpayers

Saucycarpdog

Saucycarpdog

Member
Oct 25, 2017
16,351
www.cnn.com

Companies that binged on buybacks now seek bailouts from taxpayers

Corporate America, armed with the Trump tax cuts, lavished Wall Street with a multi-trillion dollar share buyback spree over the past two years.
www.cnn.com www.cnn.com
Now, some of the same companies that binged on buybacks are in line to receive taxpayer-funded bailouts to keep them alive.

Boeing (BA), for example, spent $11.7 billion over the past two years on repurchasing stock before suspending buybacks in April 2019 because of the 737 Max crisis. The aerospace behemoth is now requesting $60 billion in federal assistance as the coronavirus crisis has crushed its customers and forced factories to shut down.

Southwest Airlines (LUV) spent $2 billion on share buybacks in 2019. Similarly, last year American Airlines Group (AAL)also spent $1.1 billion to repurchase its stock at an average cost of $32.09 per share. American Airlines shares closed Monday at just $10. Now the airline industry is seeking $50 billion in federal help as it fights for survival during a stunning decline in worldwide travel.
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This situation is only deepening the backlash against buybacks, paving the way for bipartisan restrictions against share repurchases by bailed-out companies. And it further exposes the shortfalls of President Donald Trump's corporate tax overhaul, which sparked a flurry of buybacks but not the promised business investment boom.

Buybacks at S&P 500 companies exploded by 55% to a record $806.4 billion in 2018, the first year the tax law took effect, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. S&P 500 companies repurchased another $728.7 billion of stock in 2019.

The top 10% of households owned 84% of all stocks in 2016, according to NYU professor Edward Wolff.
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Baldwin, a longtime critic of buybacks, introduced legislation last week that would permanently ban buybacks at bailed-out companies that repurchased $1 billion of stock over the last five years.

Senator Elizabeth Warren has similarly called for a permanent ban on buybacks at bailed-out companies, along with restrictions on layoffs, dividends and CEO bonuses.

Indeed, the economic stimulus legislation being debated by Congress would restrict buybacks from companies that participate in the federal loan program unless they are granted a waiver by the Treasury Secretary. However, that restriction would remain in place only while the loan is outstanding.
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2PiR

2PiR

alt account
Banned
Aug 28, 2019
978
Fuck them, if regular citizen is expected to have an emergency fund why not these companies?

seriously what the fuck. BA spent over 45 billion $ in buy backs in 3 years alone. And their marketcap dropped to as low as 55B last week lol
 
_Karooo

_Karooo

Banned
Oct 25, 2017
4,029
Tax breaks in 2018 was a crime against the United States. Absolutely no fucking reason when companies were posting insane profits and having trillion dollar market caps (few anyway).
 
exodus

exodus

Member
Oct 25, 2017
9,951
These companies should have to sell their stock to the public to raise the capital.
 
Skytylz

Skytylz

Member
Oct 25, 2017
780
They should pass a law that companies who want to do buybacks must have cash on hand for 6 months of expenses or something after the buyback occurs.
 
Doober

Doober

Banned
Jun 10, 2018
4,295
The 2018 tax cut was so fucking stupid. And all because Trump was desperate for a "win."
 
sonder

sonder

Banned
Mar 18, 2020
298
...and they will definitely get it all and then some. Then next year maybe the ceo will resign with a 100MM golden parachute and none of us will blink.
 
Opto

Opto

Banned
Oct 28, 2017
4,546
The head of the largest stockholder and the hands of the next ten, then you get a bailout
 
chaostrophy

chaostrophy

Banned
Oct 27, 2017
1,378
Boeing is asking for $60B when its market cap is about $70B. How about the government finds another $10B and nationalizes it.
 
captmcblack

captmcblack

Member
Oct 25, 2017
5,065
Either let them collapse, or let them be nationalized and let all American citizens hold shares. No exceptions.
 
smileyforall220

smileyforall220

Banned
Mar 3, 2019
1,831
Every time we bail out these industries, the taxpayers should get stock from the bailout. If they want to buy back stock, they gotta buy out the taxpayers.
 
mael

mael

Avenger
Nov 3, 2017
16,812
chaostrophy said:
Boeing is asking for $60B when its market cap is about $70B. How about the government finds another $10B and nationalizes it.
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Or just buy about $60B worth of shares and partially nationalize it.
At 6/7th of the ownership of the company there's not much the company will do without the public's approval.
 

Deleted member 18379

Banned
Oct 27, 2017
2,165
Pull yourselves up by your bootstraps. Should have managed your money better. This is what savings is for. Am I hitting all the notes this piece of shit government tells it's citizens yet.
 

CrunchyB

Member
Oct 29, 2017
1,108
As a European I say nationalize it or buy a large (controlling) stake. Keep it on life support for now, keep people employed and once things bounce back in a year or two, start selling shares again.
 
Chikor

Chikor

Banned
Oct 26, 2017
14,239
They all learned from the last rounds of bailouts after 9/11 and the great recession that they can put a gun to their workers' head and get government money with zero strings attached.
So fuck it, YOLO, what do we care, cash reserves are for losers.

We should be getting a stake in those companies if we're giving them money.
 
LukeOP

LukeOP

Banned
Oct 27, 2017
4,749
Who would have thought given trillions of dollars in tax breaks would just cause companies to back their own stock and not actually benefit their workers and health of their company?
 
jelly

jelly

Banned
Oct 26, 2017
33,841
Should nationalize them but like RBS and sorta Royal Mail, the fucking vultures make sure they get the best deal in the end when they sell it off, like a collective sydndicate to keep the price, stock low until it's out of public ownership.
 
Lilalaunebaer

Lilalaunebaer

Member
Oct 27, 2017
1,499
Company was buying back shares. How about sell the shares to get some liquidity?
Oh, the share are worth less now than when you bought them?
Tough shit. Free market. Invisible hand of the market. etc.
 
Dogo Mojo

Dogo Mojo

Member
Oct 27, 2017
2,168
Trump will let the corporations win. Republicans won't stop him, and democrats can't stop him.
 
Pwnz

Pwnz

Member
Oct 28, 2017
14,279
Places
I spent 30k extra on my mortgage principal and now I need bailout! I only have hundreds of thousands of cash in my bank and in liquid stocks but I forgot how to sell. Please help, I promise to be a good job creator.

Who falls for this shit logic?
 
Strike

Strike

Member
Oct 25, 2017
27,361
That sounds like socialism. Wouldn't want them to get too dependant on handouts and not work for it.
 
Parch

Parch

Member
Nov 6, 2017
7,980
They don't want to assume the risk. They buyback their stock before the plummet and now cry about it. The average investor also suffers from the plummet, but they're not going to going to get any bailout.
If companies want to play the market and buy and sell their stock, they should have to assume the same risks as every stock investor.
 
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