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$500 Billion Coronavirus Relief Fund Has Barely Been Used

Yuval Rosenberg

The Treasury Department has disbursed just $37.5 billion out of $500 billion in emergency coronavirus funds approved by Congress as part of the CARES Act passed in March, according to the first report of the congressional oversight commission monitoring the implementation of the law.

Airlines still waiting on billions from relief fund: Congress allocated $46 billion for aid to the air travel industry, but the Treasury Department has yet to disburse any of the money. The funds include $25 billion for airlines and $17 billion for related businesses that are critical to national security.

Lending programs not yet lending: The Federal Reserve and Treasury last month announced five lending facilities meant to help prop up various segments of the economy, including “Main Street” lending programs targeting small- and mid-sized businesses, a program for states and municipalities, and a corporate-bond buying facility. Only one of those programs is fully up and running. Treasury disbursed $37.5 billion to the corporate facility, called the Secondary Market Corporate Credit Facility (SMCCF), earlier this month.

“The Treasury and the Fed have announced these facilities but, with the exception of the SMCCF, the Treasury has not invested in them yet, nor has the Fed put them into operation,” the oversight report says. “Their size and scope may also grow as the Treasury has only pledged $185 billion of the $454 billion appropriated in the CARES Act for investments in Fed lending facilities.”

Changes to lending terms: “The report describes how even before any money from the Main Street program has been lent, the terms of the program already have evolved,” The Washington Post’s Erica Werner reports. “The changes include increasing the size of loans, eliminating a requirement that companies have to attest they need money ‘due to the exigent circumstances presented by’ the coronavirus, and modifying a requirement that companies make ‘reasonable efforts’ to maintain payroll and retain employees during the term of a loan. Instead, they will be required to make ‘commercially reasonable efforts’ to do so.”

The Fed and Treasury also expanded the $35 billion facility to buy debt from states, cities and counties, after criticism that the original guidelines left only a few dozen cities and counties eligible to participate. The facility will now buy notes from counties with a population of at least 500,000 residents (instead of the original floor of 2 million residents) and cities with a population of at least 250,000 residents (instead of a million residents). The program will also buy notes that mature within at least three years instead of two years.

The bottom line: Congress may have moved with unusual speed to provide money to address the pandemic, but while the Treasury Department quickly implemented other elements of the CARES Act, the report highlights how the lending programs have gotten off to a slow start and how many questions remain to be answered about how they will function. Roughly a third of the new report is filled with questions for the Treasury Department and the Federal Reserve about the programs.

Similar questions still hang over the oversight commission and broader oversight of the trillions in new spending approved by Congress. The five-member commission still doesn’t have a chairman, as House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell have yet to agree on a person to fill that post. The Senate also has yet to confirm a special inspector general to oversee the $500 billion Treasury fund.

The commission’s next report is reportedly due in mid-June.

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