FT News Briefing Jay Powell calls for more fiscal stimulus, BMW’s dividend plan, CLO vulnerability
May 14, 2020
Jay Powell advocates for more fiscal stimulus to protect the US economy from pandemic fallout. Meanwhile, BMW faces backlash for paying dividends while seeking government support. The discussion also highlights the rapid growth and potential vulnerabilities of collateralized loan obligations (CLOs) amid economic uncertainty. Experts elaborate on the risks surrounding these financial instruments and the impact of rising debt levels, warning they could pose challenges in the future.
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Powell Urges More Stimulus
- Fed Chair Jay Powell believes more fiscal stimulus is needed to prevent long-term economic damage.
- Republicans and the White House are resisting further stimulus due to cost concerns.
BMW's Dividend Controversy
- BMW is facing criticism for planning a dividend payout despite using Germany's Kurzarbeit program.
- Other German carmakers are also issuing dividends while utilizing the job retention scheme.
CLO Vulnerability
- The restructuring of Envision's debt highlights risks associated with Collateralized Loan Obligations (CLOs).
- CLOs, similar to CDOs, pool loans but are backed by corporate loans rather than mortgages.