Mnuchin May Get $100 Million for Investment Bank Help in Crisis

(Bloomberg) -- Treasury Secretary Steven Mnuchin would be allowed to spend $100 million on investment banks for their services in administering emergency lending programs according to drafts of legislation Congress is under pressure to pass this week.

The proposal would provide Mnuchin with funds to pay for services related to $500 billion in lending programs for small businesses, states and municipalities. Recipients could include brokers, dealers and banks serving as financial agents for the government, according to a draft copy of the bill.

The legislation would allow the institutions to “perform all reasonable duties the Secretary determines necessary to respond to the coronavirus,” according to a draft.

The provision is laid out in the part of the legislation that is being heavily debated in the Senate: $500 billion in loans and loan guarantees aimed at mitigating the virus’ damage to the U.S. economy.

Of that, $425 billion is for businesses, cities and states, while $50 billion is for passenger airlines, $17 billion for firms deemed important to national security and $8 billion for cargo airlines.

House Speaker Nancy Pelosi early Tuesday said that it appears the Senate has agreed to accept language in a House version of the bill that would create both an independent inspector general and a congressionally appointed five-person panel to supervise money the bill provides to companies.

Two people familiar with the matter said the administration had agreed to oversight of the fund for companies, but said details were not yet resolved.

Mnuchin is also courting executives from Goldman Sachs Group Inc. and other Wall Street firms to help oversee the bailout packages, Bloomberg News reported Friday.

Treasury is considering executives with broad experience to help administer loans to airlines, hotels and other industries suffering as the virus shuts down parts of the economy, the people said. The government is also considering taking equity stakes in some companies in exchange for aid, a program that financiers and bankers could administer.

The Federal Reserve could also detail some of its staff to the Treasury Department, as it did during the global financial crisis more than a decade ago.

During that crisis, Treasury Secretaries Hank Paulson and Tim Geithner brought in additional staff, including prominent Wall Street figures, to help manage the bailouts of U.S. banks and auto companies.

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