{
  "id": "R46329",
  "type": "CRS Report",
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      "source_dir": "crsreports.congress.gov",
      "title": "Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act (P.L. 116-136)",
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      "id": 623112,
      "date": "2020-04-28",
      "retrieved": "2020-04-28T22:14:03.873603",
      "title": "Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act (P.L. 116-136)",
      "summary": "The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748) was signed into law as P.L. 116-136 on March 27, 2020, to assist those affected by the economic impact of Coronavirus Disease 2019 (COVID-19). This assistance is targeted to consumers, businesses, and the financial services sector. A key part of this assistance is provided to eligible businesses, states, and municipalities in Division A, Title IV of the CARES Act.\nTitle IV allocates $500 billion to the Treasury Department (through the Exchange Stabilization Fund) to make loans and guarantees for three specified industries\u2014passenger airlines, cargo airlines, and businesses critical to national security\u2014and to support Federal Reserve lending facilities. Some have characterized this as a \u201cbailout\u201d of private industry; others assert it is necessary to avoid employment losses and maintain economic stability. 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\u2014up to $454 billion, plus whatever is not used to assist the specified industries\u2014available to the Federal Reserve. The authority to enter into new transactions terminates on December 31, 2020. Recipients are legally required to repay assistance with interest, although the ultimate subsidy involved will not be known until terms, such as interest rates and fees, have been decided and it becomes clear to what extent firms are able to repay. \nTitle IV also provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has discretion to determine what compensation to seek for this assistance and has reportedly chosen not to seek compensation from smaller recipients. According to Treasury, 93 air carriers had received $12.4 billion under the Payroll Support Program as of April 25, 2020.\nMost funding under Title IV has been used to backstop a series of Federal Reserve emergency programs created in response to COVID-19. These programs assist affected businesses or markets by making loans or purchasing assets. To date, the Fed has created programs to support markets for commercial paper, corporate bonds, municipal bonds, and asset-backed securities, as well as a loan program to help businesses with under 10,000 employees or under $2.5 billion in revenues maintain employment. To date, $215 billion of CARES Act funding has been made available by the Treasury to reimburse the Federal Reserve for potential losses on any transactions in these programs.\nThis assistance carries a number of terms and conditions. All funding faces certain conditions, such as limiting eligibility to U.S. businesses, as defined by the act, and following rules to avoid conflicts of interest. Firms receiving loans, loan guarantees, or grants directly from Treasury must maintain at least 90% of March 24, 2020, employment levels; face controls placed on share buybacks, dividends, and executive salaries; and must provide Treasury specific compensation (e.g., warrants or equity). In addition, Title IV establishes a special inspector general and a Congressional Oversight Commission to oversee the operations carried out under the title. Finally, the key agencies involved in providing this assistance (i.e., the Federal Reserve and Treasury) and the Government Accountability Office must make available to the public and Congress a series of reports on operations under Title IV of the act.",
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      "topics": [
        {
          "source": "IBCList",
          "id": 4891,
          "name": "Federal Reserve & Monetary Policy"
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  "topics": [
    "Economic Policy"
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}