Treasury Has Spent Small Part of $500 Billion in Coronavirus Aid

(Bloomberg) -- The Treasury Department has spent only $37.5 billion thus far of a $500 billion pool of funds Congress provided to help struggling businesses, including airlines, during the coronavirus pandemic, according to a congressional watchdog panel’s report.

The figures, released on Monday, show that the Treasury has been slower to deploy cash for corporations than in providing separate stimulus payments and small-business loans, even as White House officials predict a 40% decline in GDP in April through June. More than 36 million people have lost jobs in eight weeks.

About $454 billion of the $500 billion is intended for the U.S. Federal Reserve to create emergency lending programs for businesses. Of that amount, the report said, $185 billion has been committed including $37.5 billion that has been sent to the central bank, which began purchasing some assets with the money last week.

Treasury Secretary Steven Mnuchin said in prepared testimony for Congress, released after the report, that as much as $195 billion in credit support has been committed. He is scheduled to appear before a Senate committee on Tuesday with Fed Chairman Jerome Powell to talk about the rollout of the virus relief Cares Act.

None of an additional $46 billion in loans for airlines or national security companies has been distributed yet.

The report released Monday was the first by the Congressional Oversight Commission, charged with policing the $500 billion in coronavirus rescue loans.

No Chairman

The document was released even though the five-member panel still doesn’t have a chairman. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell are supposed to choose that person jointly but have yet to announce an agreement.

The 17-page report outlines dozens of topics the panel intends to examine and updates the status of aid being provided, and also cited challenges in defining what indicates success or failure in the various programs

The congressional watchdog panel indicated it would pursue a broad approach to overseeing the funds to be disbursed by the Fed and the Treasury.

The group asked both agencies how their work helps the “financial well-being of the people” of the U.S., and how it affects “overall employment.” The commission suggested that its members plan to hold the central bank and Treasury accountable beyond what is explicitly outlined in the legislation.

The report includes a series of questions for Treasury and the Fed about the implementation of the emergency lending programs. They include queries about the process for using third parties to help implement the programs as well as whether the agencies believe they will break even on the programs.

“If the agencies use economy-wide metrics, like GDP growth, unemployment rates, or wage growth, how will they isolate the effects of this program from other factors, including other federal and state relief measures?,” the report said. “If the agencies use more narrow metrics, like bond spreads, how will they assess how changes in those metrics affect the broader economy?”

Modeled After TARP Panel

The rest of the panel was chosen by Pelosi, McConnell, Senate Democratic leader Chuck Schumer and House Republican leader Kevin McCarthy. The members are Democratic Representative Donna Shalala of Florida; GOP Senator Pat Toomey of Pennsylvania; Bharat Ramamurti, a former aide to Senator Elizabeth Warren of Massachusetts; and Representative French Hill, an Arkansas Republican.

The commission was created at the insistence of congressional Democrats during negotiations with President Donald Trump’s administration over the coronavirus stimulus legislation.

The panel has a term of five years and is modeled after a similar temporary oversight commission that reviewed the Troubled Asset Relief Program following the 2008 financial crisis.

The oversight commission is one of several bodies created to monitor the flood of spending intended to help struggling airlines, corporations, main street businesses and hospitals as the pandemic has shuttered the economy.

©2020 Bloomberg L.P.

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