Insolvent or overly leveraged firms, including oil drillers and oil services firms, won't be able to tap the U.S. central bank's 'Main Street' emergency lending program, Dallas Federal Reserve President Robert Kaplan said on Wednesday.
SAN FRANCISCO - Insolvent or overly leveraged firms, including oil drillers and oil services firms, won’t be able to tap the U.S. central bank’s “Main Street” emergency lending program, Dallas Federal Reserve President Robert Kaplan said on Wednesday.
“If you are a company on the other hand that is more highly leveraged than that, concerned about insolvency, and other credit issues ... it’s not going to be able to access those programs, and there will be a substantial number of bankruptcies, restructurings, that are going to have to happen, because so much of production is being shut in,” he said.
Those changes were requested by business groups including the U.S. Chamber of Commerce and the oil and gas industry, and were seen in some quarters as catering to energy companies whose debt problems are at least in part of their own making.“There are number of companies in this industry, either drillers or service providers, that went into this highly leveraged, and I think they are going to have to pursue other actions in order to restructure their debt,” Kaplan said.
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