Critics Decry ‘Massive Step in Wrong Direction’ as Big Banks Move to Buy Up Fracking Industry Assets With Coronavirus Bailout Funds

Disaster Capitalism:”For banks to take over the oil and gas companies, economic journalist Doug Henwood told Common Dreams Friday, they will be using assurances of funding from the Federal Reserve included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March to combat the COVID-19 outbreak. Henwood said he found it “appalling” that public money from the CARES Act could be used for bailing out oil and gas companies.”

Critics Decry ‘Massive Step in Wrong Direction’ as Big Banks Move to Buy Up Fracking Industry Assets With Coronavirus Bailout Funds

Common Dreams:

“Taxpayers shouldn’t be required to backstop oil and gas companies that were already in trouble prior to the pandemic.”

"We should be phasing out carbon as quickly as possible, and fracking is an excellent place to start."

“We should be phasing out carbon as quickly as possible, and fracking is an excellent place to start.” (Photo: CGP Grey/Flickr/cc)

Climate advocates are slamming banking interests after a report Thursday revealed that JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup are planning to take over distressed oil and gas companies assets in the wake of an industry collapse, likely by using new access to federal bailout money included in the coronavirus relief package passed by Congress.

“If these banks want to get their hands even more bloody, so be it, we are taking tally.”
—Dallas Goldtooth, Indigenous Environmental Network

“It’s never been more obvious that fossil fuels are a bad investment, and yet rather than following their supposed commitments to climate action, these big banks are doubling down on their toxic investments and getting directly into the fossil fuel business,” Sierra Club campaign representative Ben Cushing said in a statement.

As Reuters reported Thursday, the decision by the banks to look into taking over oil and gas companies comes in the wake of oil price drops in March that have led to the potential for fossil fuel companies to go bankrupt under the strain of the collapse of the fracking industry.

“This development exposes the central role of banks in fossil fuels and clearly illustrates the riskiness of fossil finance,” said Rainforest Action Network senior campaigner Jason Opeña Disterhoft.

Kate Aronoff @KateAronoff

Jamie Dimon running fracking companies is the hellish detour on this timeline I probably should have but honestly did not see coming https://www.reuters.com/article/us-usa-banks-energy-assets-exclusive/exclusive-u-s-banks-prepare-to-seize-energy-assets-as-shale-boom-goes-bust-idUSKCN21R3JI 

Exclusive: U.S. banks prepare to seize energy assets as shale boom goes bust

Major U.S. lenders are preparing to become operators of oil and gas fields across the country for the first time in a generation to avoid losses on loans to energy companies that may go bankrupt,…

reuters.com

According to Reuters:

Oil and gas companies working in shale basins from Texas to Wyoming are saddled with debt.

The industry is estimated to owe more than $200 billion to lenders through loans backed by oil and gas reserves. As revenue has plummeted and assets have declined in value, some companies are saying they may be unable to repay.

[…]

If banks do not retain bankrupt assets, they might be forced to sell them for pennies on the dollar at current prices. The companies they are setting up could manage oil and gas assets until conditions improve enough to sell at a meaningful value.

“So Chase and Wells Fargo want to cut out the middleman and go into the oil business, directly destroying the climate?” 350.org founder Bill McKibben said in a statement Friday. “Greed does weird things to your mind and your heart.”

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