May 18, 2020

A Watchdog Asks Why the Trump Administration Removed a Key Requirement for Pandemic Loans

Stefani Reynolds/CNP/Zuma

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A congressional oversight panel wants to know why the Trump administration and the Federal Reserve are no longer requiring businesses seeking coronavirus relief loans to attest that the pandemic was the source of their financial woes.

The CARES Act, passed in early April, created the Main Street Lending Program, which was designed to make it easier for small- and medium-sized businesses that lost money because of the public health emergency to acquire loans. But on April 30, the Treasury Department and the Fed revised the program’s term sheets to remove a requirement that companies attest that they need the financing “due to the exigent circumstances presented by the coronavirus disease.”

The Congressional Oversight Commission, the watchdog group created to oversee the Fed’s and the Treasury’s management of CARES Act funds, asked in a report Monday why the clause was removed. “Without this requirement,” the authors added, “how will the agencies ensure they are providing liquidity ‘to eligible businesses, [s]tates, and municipalities related to losses incurred as a result of coronavirus’?” The bipartisan commission, which consists of Rep. French Hill (R-Ark.), Rep. Donna Shalala (D-Fla.), Sen. Pat Toomey (R-Penn.), and former Elizabeth Warren staffer Bharat Ramamurti, is vowing to find out.

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