The CARES Act gave the Treasury Department at least $454B to use to support the economy. The Treasury and the Fed just announced how they will use $195B of it. The announcement raises several initial questions within the jurisdiction of the Congressional Oversight Commission: 1/
On Monday, I asked some basic questions about how the Treasury and Fed would use this money. Today’s announcement provides some details, but leaves many questions for the Oversight Commission to pursue. 2/
The Treasury is using $75B to support up to $750B in Fed lending for larger corporations. The program appears to let corporations that benefit avoid the restrictions on buybacks, dividends, and executive compensation in the CARES Act. Why? 3/
The Treasury is using $75B to support up to $600B in Fed “Main Street Lending.” This lending does not appear to require companies to follow recommended restrictions in the CARES Act on maintaining payroll, offshoring jobs, and respecting collective bargaining. Why? 4/
The Treasury is using $10B to support more lending through a Fed facility called TALF. The Fed says TALF will now lend against less risky slices of riskier overall securities. Why do this, what types of firms benefit, and how does this help American families? 5/
The Treasury is using $35B to support up to $500B in lending to states and larger counties and cities. How were these eligibility criteria chosen? Why allocate $35B to states and cities but $160B to companies? 6/
What procedures have Treasury and the Fed put in place to enforce the conflict-of-interest provisions in the CARES Act and the requirement that only U.S. businesses receive support? 7/
That’s just a preliminary list of questions. The bottom line is that the Treasury and Fed used nearly $200 billion of taxpayer money and we need to understand why they made the decisions they did and how they serve Congress’ goals for that money. 8/
Today’s announcement also requires the Oversight Commission to produce its initial report within 30 days. It’s time to get the Commission up and running so we can dig into the details and fulfill this important obligation to the American people. END
