WASHINGTON – The Treasury Department and Federal Reserve have lent hardly any money under a $500 billion fund created by the economic rescue law passed in response to the coronavirus crisis, a congressional oversight panel says in a new report.
The Treasury fund is being used to guarantee new, expansive Federal Reserve lending programs to companies, states and cities that could be leveraged to reach as much as $4.5 trillion.
So far only one of the new Fed programs has started operating, a lending fund likely to be tapped by large public companies, the report by the Congressional Oversight Commission said. The program was started on May 11 with $37.5 billion from Treasury.
The oversight panel issued its first report Monday even though it still does not have a chairman. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have not agreed on a chair, leaving the five-member commission without a leader.
The commission has four other members appointed by congressional leaders. They produced a 17-page report that contains mostly questions about how the Treasury fund is going to function.
For instance, the panel asked how Treasury and the Fed will assess the program's success or failure. If the agencies use economy-wide metrics, such as economic 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 commission asked.
Federal Reserve Chairman Jerome Powell is pledging to reveal names and other details of entities that borrow from emergency programs the central bank has set up to offset the economic hit from the pandemic. In prepared testimony for a Tuesday congressional hearing, Powell says the Fed will disclose amounts borrowed and interest rates levied under programs to provide credit for large corporations, state and local governments and medium-sized businesses.
He and other officials "recognize that the need for transparency is heightened when we are called upon to use our emergency powers,” Powell's testimony says.