Panelists say financial aid fund did little

LITTLE ROCK — A $500 billion Treasury fund designed to help Americans cope with the covid-19 financial crisis has provided little direct assistance thus far, the Congressional Oversight Commission reported Thursday.

The Federal Reserve, with backing from the U.S. Treasury Department, has announced plans for 11 lending facilities, but the programs have been slow to get off the ground, the commission’s report noted.

“To date, the majority of those lending facilities are not operational, and the facilities have made a total of $6.7 billion in purchases,” the commissioners wrote.

The fund and the commission that monitors it were created as part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, which became law on March 27.

One of the facilities, known as the Main Street Lending Program, will provide loans to small and medium-size businesses with up to 15,000 employees. It can “support up to $600 billion in lending,” the report stated.

The Main Street program was formally started up Monday.

Another, the Municipal Liquidity Facility, can provide up to $500 billion in lending to state and local governments. Illinois, earlier this month, was the first state to tap the emergency assistance.

U.S. Rep. French Hill, R-Ark., who serves on the commission, said the programs are needed.

“As I’ve said before, on the record, I wish that the Fed and the Treasury could have gotten both the Municipal Liquidity Facility and the Main Street Facility up and running in early May rather than midJune,” he said. “I’d like to see the response sooner rather than later so that we could make adjustments earlier in this reopening process and this economic crisis process.”

Despite the slow rollout, the Federal Reserve’s actions have had a calming effect, the commission’s report suggested.

“The Federal Reserve’s mere announcement that it was establishing these facilities has helped improve the condition and performance of financial markets. This improvement has enabled certain larger businesses to access credit through the capital markets at lower rates to fund their operations during these challenging times. In addition, many direct and indirect owners of financial assets, such as investors, retirees, and pension recipients, have seen those assets recover or gain value due to the improvement of the financial markets,” the report states.

The Dow Jones Industrial Average, which passed the 29,000 mark in February, fell to 18,591.93 on March 23 as international commerce ground largely to a halt.

Since then, it has reversed many of those losses. It closed Thursday at 26,080.1.

“The effect of these actions on the financial well-being of the American people is difficult to fully quantify, though it is clear that some parts of the economy are in much better shape and some entities have benefited more than others. In some areas of the economy, such as the ability of larger companies to issue debt to continue operations, the agencies’ actions have had a clear and powerful impact. But there is less evidence that the actions of the Treasury and the Federal Reserve have been as beneficial for small and mid-sized businesses and state and local governments,” the commissioners wrote.

Of the $500 billion, up to $46 billion is for loans benefiting the airline industry and businesses vital to national security. None of that money has been disbursed, the report noted.

Hill, a former Little Rock banker, was appointed to the commission by House Minority Leader Kevin McCarthy, R-Calif., and is one of four people serving.

The group still lacks a chairman.

The person who gets the job must have the backing of both House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky.

Thursday, Hill expressed confidence that the post will soon be filled.

“Both Leader McConnell and Speaker Pelosi have worked diligently since late April to identify a chair and I believe they are close,” he said.

Between now and September 2025, the commissioners are tasked with evaluating efforts by the U.S. Treasury Department and the Federal Reserve System board of governors “to provide economic stability as a result of the coronavirus disease 2019 (COVID-19) pandemic of 2020,” the new law states.

They will also monitor the “impact of loans, loan guarantees, and investments made under this subtitle on the financial well-being of the people of the United States and the United States economy, financial markets, and financial institutions,” the law says.