Businesses get 0.008% of coronavirus funding

The Treasury has disbursed less than 8% – only $ 37.5 billion from $ 500 billion – emergency funds approved by Congress two months ago for loans and loan guarantees to help stabilize the economy, according to Monday’s report from a congressional oversight commission created to monitor how the money is spent.

None of the $ 46 billion set aside by Congress specifically for the aviation industry and important businesses to maintain national security has been allocated as Treasury officials continue to review applications for the money, the commission said.

And only one of the five programs that the Ministry of Finance and the Federal Reserve created to get $ 454 billion in the economy and help states and local governments operate, according to the report.

The half-trillion-dollar aid program is part of the CARES Act, passed by Congress in March to help boost the US economy, which was largely closed by the COVID-19 pandemic. This is separate from the Paycheck Protection Program, which has proven to be very popular in providing payroll loans that can be forgiven for small businesses.

The report contains a series of questions for Minister of Finance Steven T. Mnuchin and Federal Reserve Chair Jerome Powell about when and how the program will disburse loans.

The only loan facility that has received funding is the so-called Secondary Market Corporate Credit Facility, which should buy corporate debt. Treasury released $ 37.5 billion in early May.

Most of the remaining promised money will go to the three “Main Road” loan programs, which aim to help businesses with less than 15,000 employees or annual income of not more than $ 5 billion. The program will offer a four-year loan to eligible businesses that are in good financial condition before the closure of the coronavirus, with principal and interest payments deferred for one year. The Fed will buy 85% to 95% of the loan value.

The report links the delay in distributing money to the overly strict guidelines originally proposed. Prospective borrowers and lenders raise concerns about the guidelines, resulting in changes such as increasing the number of loans and eliminating the requirement that companies must prove they need money “because of the emergencies presented by” coronavirus, according to the report.

Regulations have also been amended so that they no longer require companies to make “reasonable efforts” to maintain payroll and retain employees throughout the loan period, but instead will be asked to make “commercially reasonable efforts” to do so.

The Federal Treasury and Reserve also modified the City Liquidity Program, which is designed to buy debts held by states, cities and counties, after criticism that the population threshold in the guidelines is so high that only a few dozen cities and counties will qualify.

Now the program will consider districts with a population of at least 500,000 – down from 2 million indigenous people – and cities with populations of at least 250,000 residents, down from 1 million originally proposed.

State and local governments can use funds from debt purchases to make up for a decrease in cash flow due to business closures and travel caused by coronavirus, something that an elected official suggests will be needed to reduce the reduction in education and other public services.

Congress began to see what had delayed the disbursement of funds. The Senate Banking Committee has a hearing scheduled for Tuesday. Rep. Brad Sherman (D-Northridge), said he was working on setting up the House Financial Services subcommittee round table which he led next week to check the guidelines for the programs.

“The sooner the better, and this is rather slow,” Sherman said.

Rep. Katie Porter (D-Irvine), who serves on House Financial Services and the Oversight committee, said in a statement she was worried that the funds were not available.

“The delay of the Minister of Finance Steve Mnuchin in getting aid money to the country’s biggest businessman raises the question of $ 454 billion: What is the robbery? I am concerned that this assistance did not go into the pockets of working families and that Congress has not fully utilized our institutional oversight mechanism to expedite assistance, including the COVID-19 Congressional Monitoring Commission which still lacks a chair, “he said.

The next commission report will be due in mid-June. Panel members included Senator Patrick J. Toomey (R-Pa.), Who was appointed by Senate Majority Leader Mitch McConnell (R-Ky.); Rep. Donna Shalala (D-Fla.), Who was appointed by House Speaker Nancy Pelosi (D-San Francisco); Rep. French Hill (R-Ark.), Appointed by House Minority Leader Kevin McCarthy (R-Bakersfield); and Bharat Ramamurti, former adviser to Senator Elizabeth Warren who was appointed by Senate Minority Leader Charles E. Schumer (D-N.Y.).

McConnell and Pelosi have not agreed on who will lead the five-member panel. A McConnell aide had no information on Monday about when the promise would be made.

Critics say the failure to appoint a commission chairman two months after the regulatory body was formed illustrates how slowly Congress and the government has moved to monitor the release of more than $ 2 trillion provided under the CARES Act.

None of the three regulatory bodies created by this law are fully functional. Together with the COVID-19 Congressional Oversight Commission, the bill created a special inspector general for pandemic recovery to monitor $ 500 billion for the Ministry of Finance. Presidential nominee Trump has not been approved by the Senate.

There is also the Pandemic Response Accountability Committee, which consists of nine general inspectors whose departments have received coronavirus response funds through the CARES Law. Trump dismissed the inspector general who was elected chairman, and the new chairman has yet to be named.