Federal Reserve Bank of Dallas President Robert Kaplan told Yahoo Finance on Wednesday that plummeting oil prices will have to result in some bankruptcies and restructurings. But he clarified that the Fed will not step in to save insolvent companies that had pre-existing credit issues.
“There are a number of companies in this industry, either drillers or service providers, that went into this highly leveraged, and I think they’re going to have to pursue other actions in order to restructure their debt,” Kaplan told Yahoo Finance’s “On The Move.”
Kaplan said creditworthy companies that pass lenders’ cash flow tests will be eligible for loans through the Fed’s forthcoming Main Street Lending facility.
Last Thursday the Fed expanded the scope of the program to offer low-cost, four-year loans to larger companies with as many as 15,000 employees or up to $5 billion in annual revenue. The loans would allow companies to