Remember That $500 Billion Stimmy Slush Fund? Neither Does Treas Sec Steven Mnuchin!
Remember when Congress was putting together the great big stimulus bill that eventually became the $2.2 trillion CARES Act? There was a lot of worry that one portion of the bill, a $500 billion fund that the Treasury Department would use to loan money to pretty much any industry it decided needed help because of the coronavirus shutdown, would be nothing more than a "slush fund" to reward businesses the Trump administration liked. Well all you liberal worrywarts owe Treasury Secretary Steven Mnuchin a big apology, because according to the first official report from the congressional oversight commission put in place to monitor the fund, Treasury hasn't done anything untoward with the funds. That's because Treasury has barely done anything at all with that big barrel of money that was supposed to save the economy, as the Washington Postreports.
The money was supposed to be used to help prop up large segments of the U.S. economy at a time when millions of Americans had lost their jobs or were ordered to work remotely. The Treasury Department has speedily implemented other parts of the Cares Act, but its work on the $500 billion fund has so far led to little action at a time when a growing number of firms are seeking bankruptcy protection and continuing to lay off employees.
Talk about a victory for government ethics! If the fund hasn't made any loans, then it certainly can't have made any shady loans, either!
Mnuchin and Federal Reserve Chair Jerome Powell are likely to hear a lot of questions from Congress today when they appear before the Senate Banking Committee, and they should have a fairly easy time explaining at least that part of the bill's effect on the economy: Still waiting to make some loans, but when we do, they should really do a lot of good! (Also, despite our funny sub-head, the legislation specifically blocks funds from going to companies owned by senior US officials or their families, like that would really stop certain grifty first families we can think of.)
One thing to keep in mind about this $500 billion sucker is that it's a separate part of the bill from the Paycheck Protection Program (PPP), the "small business" loan program run by the Small Business Administration to give loans to little mom and pop outfits like giant national restaurant companies and hotel chain corporations that took advantage of the rules and sucked up all the money.
The 17-page report from the imaginatively named "Congressional Oversight Commission" notes that, so far, Treasury hasn't disbursed any of the $46 billion designated to fund loans and loan guarantees aimed at saving the airline industry and "businesses critical to maintaining national security," which is the law's safe-word for "bailing out Boeing."
Treasury has so far announced there will be six "lending facilities" to loan out the $400 billion that's up to its discretion. Of those, only one fund, something called the "Secondary Market Corporate Credit Facility," which is aimed at buying up corporate debt, has actually been funded. The other five are so far just sitting there with nothing in them. Maybe Treasury is waiting for each to decide on a motto and a flag design, we don't know.
WaPo looks at one of those funds, the "Main Street Lending Program" that's intended to help small and medium-sized businesses (but which again is different from the PPP). Turns out that Treasury has been fine-tuning that one so the companies getting money won't have to meet a lot of burdens like showing they need the money because of 'rona at all.
The report describes how even before any money from the Main Street program has been lent, the terms of the program already have evolved. The changes include increasing the size of loans, eliminating a requirement that companies have to attest they need money "due to the exigent circumstances presented by" the coronavirus, and modifying a requirement that companies make "reasonable efforts" to maintain payroll and retain employees during the term of a loan. Instead, they will be required to make "commercially reasonable efforts" to do so.
See? Really helpful if you can get the money and still lay people off because keeping them employed wasn't "commercially reasonable." The changes very conveniently open the way for fossil fuel companies to get easier access to the funds, and are being called a "stealth bailout" for oil and gas companies.
We'd note that "Main Street" program seems to be the program that Treasury has tinkered with the most; as far as we can tell, the other "lending facilities" don't appear to have been as radically altered. Sure, the CARES Act passed eight weeks ago, but there's no need to rush. Maybe Treasury will need to work on improving the other parts as well so they're easier for big companies to get at.
The Post notes other hiccups in getting this part of the bill off the ground, too. After Donald Trump shitcanned the inspector general who was supposed to oversee the program, the Senate has yet to confirm his replacement. On the congressional side of things, while there are four members of the oversight board, two Republicans and two Democrats chosen by House and Senate party leaders, there's still no chair for the committee because Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi can't agree on who should get the job.
In the meantime, Republicans are telling Democrats there's no need to start talking about a "Phase Four" stimulus, even though the House has passed a bill already. But you see, the White House and McConnell want to wait and see how well the CARES Act fixes the economy first, and only then can they decide if more stimulus is needed.
OHHHHH, okay! Now we understand why Mnuchin isn't actually stimulating anything! (Also, sorry for that mental image.)
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Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.