Hybrid Hearing - Oversight of the Treasury Department’s and Federal Reserve’s... (EventID=111021)

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On Thursday, September 22, 2020, from 10:30 a.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a hybrid hearing entitled, “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response."

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Witnesses for this one-panel hearing will be:

• The Honorable Steven Mnuchin, Secretary, U.S. Department of the Treasury

• The Honorable Jerome Powell, Chair, Board of Governors of the Federal Reserve System


Overview
The Coronavirus Disease 2019 (COVID-19) pandemic has had profound health, economic and financial impacts globally and in the United States. According to the Centers for Disease Control and Prevention (CDC), there have been more than 6.6 million cases and 196,000 deaths in the United States as of September 17. Real gross domestic product declined at an annualized rate of 31.7% in the second quarter of 2020 according to the August 27 second estimate from the Bureau of Economic Analysis (BEA). In response, Congress has enacted a series of laws, including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act),3 which was signed into law on March 27, 2020. The CARES Act directs the U.S. Department of the Treasury (Treasury) and the Board of Governors of the Federal Reserve System (Federal Reserve or Fed) to take a series of actions to assist those affected by the economic impact of the pandemic, including consumers, businesses, non-profits, states, territories, and municipalities.

The law established ongoing streams of reporting to Congress related to the activities of the Treasury and the Fed under the CARES Act including: bimonthly reporting by GAO,4 ongoing oversight and monthly reports by the Congressional Oversight Commission,5 and quarterly reports by the Special Inspector General for Pandemic Recovery (SIGPR). The law also requires the Treasury Secretary and Federal Reserve Chair to testify quarterly before the Committee. This is the Committee’s second hearing fulfilling this statutory requirement.

Emergency Relief for Businesses, Nonprofits, States, Territories, & Municipalities
Congress appropriated $500 billion to the Treasury’s Economic Stabilization Fund to provide loans, loan guarantees or other investments, either directly or through programs and facilities administered by the Federal Reserve, to eligible businesses, nonprofits, states, territories, and municipalities as provided under Title IV of the CARES Act.

Treasury Emergency Lending Programs for Certain Industries.
Of the $500 billion, Treasury can make up to $25 billion available to passenger airlines, up to $4 billion to cargo airlines, and up to $17 billion to businesses critical to maintaining national security. Treasury can make the remainder—$454 billion plus any unused funds initially allocated to assist the specified industries—available to support Federal Reserve lending facilities. The authority to enter into new transactions terminates on December 31, 2020. Recipients are legally required to repay assistance with interest. To date, Treasury has announced one Title IV (Subtitle A) loan of $700 million to a trucking company (YRC Worldwide Inc.) on the basis that the company is critical to national security. It also announced letters of intent with ten major airlines, which may result in future loans. Separate from the $500 billion, Title IV of the CARES Act provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related industries. As of August 12, Treasury has approved over $27 billion to 586 applicants, with $24.2 billion in anticipated support to 338 passenger air carriers, $660.4 million to 35 cargo companies, and almost $2.3 billion to 213 contractor companies.12

Federal Reserve Emergency Lending Programs and Facilities.
The Fed has created nine temporary emergency programs and facilities using authorities under Section 13(3) of the Federal Reserve Act in response to COVID-19.13 Many are backed by Treasury’s Exchange Stabilization Fund (ESF), including at least $454 billion provided through the CARES Act, in the event of losses. Seven of these programs are backed by ESF funds: Commercial Paper Funding Facility (CPFF); Main Street Lending Program (MSLP); Money Market Fund Liquidity Facility (MMLF); Municipal Liquidity Facility (MLF); Primary Market Corporate Credit Facility (PMCCF); Secondary Market Corporate Credit Facility (SMCCF); and Term Asset-Backed Securities Loan Facility (TALF). The other two emergency programs not backed by the ESF are the Primary Dealer Credit Facility (PDCF), and the Payroll Protection Program Lending Facility (PPPLF).....

Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406869