When the Senate unanimously passed the coronavirus rescue package in March, it opted against putting substantive restrictions on how companies use the emergency funding. The bailouts have very few strings attached, allowing large corporations to buy back stock, pay out dividends to shareholders, funnel millions of dollars directly to executives and go on merger binges to buy up smaller, weaker competitors.

But the Federal Reserve, which is overseeing up to $4 trillion in funding under the rescue plan, still commands significant influence over how companies use this money. So this week, nine progressive organizations, led by the American Economic Liberties Project, sent a letter to Fed Chairman Jerome Powell urging him to block any company that receives rescue funding from engaging in merger activity.

“The Fed must aggressively attempt to retain institutional credibility as a neutral actor in our economic order,” the groups wrote. “It should not help finance a merger wave that leads to large-scale consolidation.”

By snapping up their rivals, big firms can eliminate sources of competition on worker pay and consumer price. Economists believe that one reason wage growth was so slow over the course of the recovery from the 2008 financial crisis was that firms engaged in a historic merger binge in the aftermath of the crash. Some of those blockbuster deals resulted in immediate, massive layoffs. When Pfizer acquired Wyeth Pharmaceuticals, they eliminated 19,500 jobs (even as Wyeth executives received a cool $75 million). 

Read the full article on the HuffPost.