The Federal Reserve Must Not Finance a Merger Wave

May 7, 2020 Press Release

For Immediate Release: May 7, 2020

Media Contact: Robyn Shapiro,, 201-819-2526

 The Federal Reserve Must Not Finance a Merger Wave

Groups ask Chairman Jerome Powell & Treasury Secretary Steve Mnuchin to condition emergency lending on merger and private equity limits

Washington, D.C. – With dominant corporations and predatory financiers strengthened by the CARES Act and better positioned to buy up businesses in distress, nine groups today sent a letter to Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin urging them to freeze all mergers and acquisitions activity by otherwise viable corporations as a condition for use of the Federal Reserve and Treasury’s emergency credit programs.

The bold actions of the Federal Reserve and Treasury have facilitated the flow of credit in the economy, especially among large corporations and financial institutions. But without restrictions on this public lending, the Federal Reserve and Treasury’s emergency credit programs will open the door to a taxpayer supported merger free-for-all and resulting layoffs. Below is a list of mergers that took place in 2008-2010 during the last crisis, as well as the resulting job losses.

“The Federal Reserve must make sure corporations do not use public money to consolidate markets and create new monopolies,” said Economic Liberties’ Research Director Matt Stoller. “Stopping corporations receiving federal assistance from buying up or merging with their smaller competitors is common sense – and it is supported by an overwhelming, bipartisan majority of Americans. We cannot allow this national crisis to become a monopoly free-for-all.”

“The government response to the current pandemic crisis channels taxpayer subsidies to large companies that have close relationships with banks and the capital markets, even as public health measures are decimating small businesses,” said Marcus Stanley, Policy Director for Americans for Financial Reform. “Unless the Federal Reserve bans the use of funding for mergers and acquisitions, this could result in a major restructuring of American businesses that increases the power of large corporations.”

“While bold economic action in this pandemic by monetary authorities is necessary, it’s critical to ensure that the Federal Reserve doesn’t accidentally finance a wave of unnecessary private equity buy-outs,” said Eileen Appelbaum, the Co-Director of the Center for Economic and Policy Research and the author of Private Equity at Work: When Wall Street Manages Main Street. “Private equity funds often reduce employment when they buy a company, so financing such takeovers would undermine the Fed’s attempt to otherwise preserve employment.”

“Corporate concentration begets and exacerbates crises, and the Federal Reserve must put strings on the bailout to make sure that recent trends towards increased concentration don’t accelerate during the and after the pandemic,” said David Segal, Executive Director of Demand Progress Education Fund. “Too-big-too-fail firms helped cause the 2008 crisis and lending practices by big banks are making it harder to address needs of small businesses and ordinary people as we confront the coronavirus. Moreover, late last year the Fed approved the largest post-2008 bank merger, as Suntrust and BB&T combined to form Truist – which spent the first quarter laying off hundreds of people and plans to pay out dividends throughout the crisis even as it anticipates more layoffs and branch closures.”

The average U.S. family is $5,000 poorer due to corporate concentration. Monopolies pay workers less: research shows the median annual compensation – now only $33,000 – would be more than $10,000 higher if employers were less concentrated. They also charge consumers more. Mergers between companies result in a 7 percent price increase, while markups—how much companies charge for products beyond their production costs—have tripled since 1980. And as corporate monopolies extract more and more wealth and power from working people, economic inequality grows.

The full letter is available here.

Signing organizations: 

Action Center for Race and the Economy

American Economic Liberties Project

Americans for Financial Reform

Center for Economic and Policy Research

Demand Progress

Institute for Local Self Reliance

Main Street Alliance

Public Citizen

Public Equity Stakeholder Project



Economic Liberties works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. AELP believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.