Trump Says Economic Rescue Package Should Ban Buybacks

President Donald Trump on Saturday said that companies accepting rescue funds from the U.S. government should not be allowed to buy back shares.

“I am strongly recommending a buyback exclusion. You cannot buy back your stock,” Mr. Trump said at a press conference Saturday afternoon.

The Senate is currently crafting a bill to provide the economy with rescue funds, including hundreds of billions of dollars of money intended to help companies avoid laying off workers during the coronavirus crisis. Many companies and industry groups have said they government assistance to make it through this era of massive shutdowns without widespread layoffs and bankruptcies.

The rescue funds are likely to come with various strings attached, such as prohibitions on buybacks or dividend payments that would last at least until the government assistance is paid back. Some on Capitol Hill, including Massachusetts Democrat Senator Elizabeth Warren, have argued that the buyback prohibitions should be made permanent.

Many economists, however, have warned against making the conditions for taking rescue funds too punitive. Executives at some companies would likely choose to layoff workers and even risk bankruptcy rather than accept permanent restrictions on capital distributions or give up operational control or board seats to the government. That would undermine the goal of supporting ongoing unemployment and minimizing disruptions.

President Trump did not make it clear how long he believes restrictions on buybacks would last, although his comments appeared to contemplate them lasting only as long as government funding remains outstanding.

‘This time I’m saying, ‘You’re not doing that.’ I don’t want money to be used for that. I want money to be used for workers and for opening businesses, keeping businesses open. Not buybacks,” Trump said.