The congressional oversight committee created by the CARES Act to oversee the implementation of all the money released has issued its first report, and found it's first big problem: Steven Mnuchin's Treasury Department is hoarding $500 billion that was intended to help stabilize the economy. The four-member board, which as of yet doesn't have a chairperson because House Speaker Nancy Pelosi and Senate Majority Leader have not agreed on who should lead it, issued its first report, and highlighted that missing money. Whether by incompetence or Machiavellian design, the money isn't going where Congress intended.
The Treasury was provided the $500 billion "for lending to businesses and to state and local governments to help support and stabilize the economy," and was authorized to "make loans, loan guarantees, and other investments to provide liquidity 'to eligible businesses, [s]tates, and municipalities related to losses incurred as a result of coronavirus,'" the committee explains. One of the key ones, the Main Street Lending Program that is supposed to help small and medium-size businesses, hasn't been finalized yet and the terms keep changing. This is where it starts looking a little nefarious.
Before any money from this Main Street program has been lent, Treasury has been changing the terms of the program, from increasing the size of the loans to eliminating a requirement that the business attests they have been financially harmed "due to the exigent circumstances presented by" coronavirus. So any business can apply, not just those threatened by the pandemic's economic effects. They've also rewritten a requirement that companies make "reasonable efforts" to maintain payroll and keep employees through the term of a loan to say they will be required to make "commercially reasonable efforts" to do so. Which means what? For example, reopening prematurely and potentially exposing their employees and customers to the virus?
They've also increased the maximum loan size under this program to $200 million, because so many Main Street kinds of businesses need $200 million, and decreased the minimum loan size to $500,000, which is a lot bigger than many small businesses would want to take on. This is not shaping up to be much of a program for small businesses. But why should it? This is the $500 billion corporate slush fund Mnuchin, Trump, and Senate Republicans wanted. It's not supposed to help out regular people.
Additionally, $46 billion was allocated in a Treasury fund to provide loans for the airline industry and "business critical to national security." It hasn't spent any of that money, despite the fact that the deadline for applications for the airline industry was April 17, and for the other businesses May 1. Additionally, the Federal Reserve and Treasury announced on April 9 that the Treasury would create five "lending facilities" operated though the Fed to loan out the rest of the money. So far only one, the Secondary Market Corporate Credit Facility has any money; Treasury has put $37.5 billion in it.
The CARES Act gave way too much discretion to the Treasury Department and now we're seeing the first indications of that. That's $500 billion that could be out in the economy right now, helping people and truly helping small businesses and their workers stay afloat. And while that $500 billion is being held up by Treasury, McConnell and Trump are insisting that enough has been done and we can wait to help the people.