Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act (P.L. 116-136)

April 28, 2020 – January 6, 2021 R46329

Treasury and Federal Reserve Financial
January 6, 2021
Assistance in Title IV of the CARES Act
Andrew P. Scott,
(P.L. 116-136)
Coordinator
Analyst in Financial
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136) was
Economics
enacted 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
Marc Labonte
part of this assistance is provided to eligible businesses, states, and municipalities in Division A,
Specialist in
Title IV, of the CARES Act. Title IV allocates $500 billion to the Department of the Treasury,
Macroeconomic Policy
through the Exchange Stabilization Fund (ESF), to make loans and guarantees for three specified

industries—passenger airlines, cargo airlines, and businesses critical to national security—and to
support Federal Reserve lending facilities. Some have characterized this as a “bailout” of private
Rachel Y. Tang
industry; others assert that it was necessary to avoid employment losses and maintain economic
Analyst in Transportation
and Industry
stability.

Of the $500 billion, Treasury can make up to $25 billion available to passenger airlines, up to $4
Ben Wilhelm
billion to cargo airlines, and up to $17 billion to businesses critical to maintaining national
Analyst in Government
security. Treasury can make the remainder—up to $454 billion plus whatever is not used to assist
Organization and
the specified industries—available to the Federal Reserve. The authority to enter into new
Management
transactions terminated on December 31, 2020. After the end of the year, remaining funds can

still be used to support existing transactions until 2026. Recipients are legally required to repay
assistance with interest. The ultimate subsidy involved will not be kno wn until loans and

investments have been repaid, but Treasury has recorded subsidies of $19 billion so far.
As of the end of 2020, Treasury had approved over $21.1 billion in loans to 24 air carriers, repair station operators, and ticket
agents and almost $736 million in loans to companies deemed critical to national security, including a $700 million loan to a
trucking company. Most 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. The Treasury made $195 billion available under the CARES Act to reimburse the Federal Reserve for potential losses
on these programs. These programs supported markets for corporate bonds, municipal bonds, and asset-backed securities and
also included a “Main Street Lending” program to help businesses and nonprofits with under 15,000 employees or $5 billion
in revenues maintain employment. The Treasury Secretary decided against extending these programs past the end of 2020.
The Fed had outstanding assistance of $41.1 billion at the end of 2020.
Title IV also provides up to $32 billion to continue payment of employee wages, salaries, and benefits at passenger and cargo
air carriers and certain contractors. These grants do not need to be repaid, but Treasury determined that larger recipients are
required to provide Treasury with financial instruments as appropriate compensation. As of the end of 2020, Treasury had
approved almost $25 billion in payroll assistance to 352 passenger airlines, $828 million to 39 cargo airlines, and $2.4 billion
to 220 contractors. P.L. 116-260, enacted on December 27, 2020, provided an additional $16 billion for payroll support.
Title IV 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 pre-pandemic 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 a series of reports on operations
under Title IV.
Most of the money available under Title IV was unused or unneeded when authority expired at the end of 2020. P.L. 116-260
rescinded $429 billion, prohibited the Fed from providing further assistance under programs backed by the CARES Act, and
prohibited the use of ESF funds to reopen the Fed’s facilities for corporate bonds, municipal bonds, and Main Street Lending.
Congressional Research Service

Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Introduction1
On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act; H.R. 748) into law as P.L. 116-136. The CARES Act is a wide-ranging act to
provide relief to consumers, smal businesses, and certain industries amid the economic fal out of
COVID-19, which featured unprecedented business disruptions.2
Title IV of the CARES Act contains numerous provisions aimed broadly at stabilizing the
economy and helping affected households and businesses.3 It has received considerable attention
for containing funding for industry and financial services.4 Specifical y, Section 4003 directs the
Department of the Treasury (Treasury) and the Federal Reserve (Fed) to make up to $500 bil ion
available to support various businesses in the aviation sector as wel as the financial system.
Some have characterized this as a “bailout” of private industry; others assert that it is necessary to
avoid employment losses and maintain economic stability—the two views are not necessarily
mutual y exclusive. Section 4112 directs Treasury to provide $25 bil ion to continue payment of
employee wages, salaries, and benefits at passenger air carriers; $4 bil ion for similar purposes at
cargo air carriers; and $3 bil ion for employees of certain contractors that provide direct services
to air carriers.
Authority to use these funds expired at the end of 2020. P.L. 116-260, enacted on December 27,
2020, rescinded $429 bil ion from Title IV, prohibited the Fed from providing further assistance
under programs backed by the CARES Act, and prohibited Exchange Stabilization Fund (ESF)
funds from being used to reopen the Fed’s facilities for corporate bonds, municipal bonds, and
Main Street Lending.
This report provides an overview of Section 4003 and related provisions and explains the terms
and conditions associated with the assistance. Additional y, it discusses the funds made available
in Section 4112 of Title IV for worker support at air carriers and related businesses.
Financial Assistance in Division A, Title IV5
Title IV provisions provide funding for eligible businesses, states, and municipalities as defined
by the act.6 In particular, Section 4027 appropriates $500 bil ion to the ESF for use by the

1 T his section was written by Andrew Scott.
2 Congressional access to all the current CRS products pertaining to different aspects of the COVID-19 pandemic can
be found at https://www.crs.gov/resources/coronavirus-disease-2019. For a list of CRS experts on various parts of the
CARES Act (P.L. 116-136), see CRS Report R46299, Coronavirus Aid, Relief, and Econom ic Security (CARES) Act:
CRS Experts, by William L. Painter and Diane P. Horn.
3 T he CARES Act also provides financial assistance to small businesses in T itle I (including the Payroll Protection
Program) and assistance to states and municipalities in T itle V. See CRS Report R46284, COVID-19 Relief Assistance
to Sm all Businesses: Issues and Policy Options, by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry ; and CRS
Report R46298, The Coronavirus Relief Fund (CARES Act, Title V): Background and State and Local Data , by Grant
A. Driessen.
4 T itle IV also permits federal guarantees for uninsured bank deposits and money market funds, which are beyond the
scope of this report. For more information, see CRS Insight IN11307, The CARES Act (P.L. 116-136) Section 4008:
FDIC Bank Debt Guarantee Authority, by David W. Perkins; and CRS In Focus IF11320, Money Market Mutual
Funds: A Financial Stability Case Study, by Eva Su. For more on T itle IV of the CARES Act, see CRS Report R46301,
Title IV Provisions of the CARES Act (P.L. 116-136), coordinated by Andrew P. Scott .
5 T his section was written by Andrew Scott.
6 Eligible businesses is defined by the act as air carriers and U.S. businesses that have “not otherwise received adequate
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Treasury Secretary,7 and Section 4003 al ows Treasury to use the $500 bil ion to support eligible
businesses, states, and municipalities that have suffered losses due to COVID-19.8 As discussed
in the next section, Section 4003 al ocates up to $46 bil ion for Treasury to directly provide loans
and loan guarantees as follows: (1) not more than $25 bil ion for passenger air carriers (and
certain related businesses), (2) not more than $4 bil ion for cargo air carriers, and (3) not more
than $17 bil ion for businesses critical to maintaining national security. Treasury may make funds
from the remaining $454 bil ion, plus any unpledged funding from the $46 bil ion, available to
support Fed facilities to provide liquidity to the financial system through lending to eligible
businesses, states, and municipalities (described in the “Federal Reserve Emergency Facilities
Backed by CARES Act Funding” section, below).
Section 4029 terminates this authority on December 31, 2020, and al ows outstanding loans and
guarantees to be modified, restructured, or otherwise amended after that date subject to a
restriction: The duration of assistance to the passenger air industry cannot be extended beyond
five years from the initial origination date. Section 4027 al ows funding to be used for those and a
limited number of other purposes after 2020. Because loans and investments wil not mature for
several years, Section 4027 does not return unused funding to the Treasury general fund until
January 1, 2026, at which point it can be used only for deficit reduction.
Section 4003 requires recipients to repay this assistance with interest, fees, and, in some cases,
compensation in the form of warrants, equity, or senior debt. Under the Federal Credit Reform
Act (FCRA; P.L. 101-508), the Office of Management and Budget and the Congressional Budget
Office (CBO) are to estimate the subsidy associated with this assistance based on the difference
between the present discounted value of both the assistance and income received by Treasury
from principal and interest payments (along with other forms of compensation).9 The ultimate
size of this subsidy wil not be known until it becomes clear to what extent firms are able to repay
assistance.10 To date, Treasury has estimated subsidies of about $20 bil ion.11 By contrast,
Sections 4112, 4113, and 4120 provide up to $32 bil ion in grants to continue payment of
employee wages, salaries, and benefits at airline-related industries. The Treasury Secretary has

economic relief in the form of loans or loan guarantees provided under this Act.” States is defined by the act as
including the District of Columbia, U.S. territories, multistate entities, and Indian tribes.
7 T he original purpose of the ESF was to allow the T reasury to intervene in foreign exchange markets to stabilize the
value of the dollar, but the T reasury Secretary has broad discretion on when and how it can be used. It has been used in
response to the 2008 financial crisis and COVID-19. For more information, see CRS In Focus IF11474, Treasury’s
Exchange Stabilization Fund and COVID-19, by Marc Labonte, Baird Webel, and Martin A. Weiss.
8 Up to $100 million of the total may be used on administrative costs.
9 If the former were greater than the latter, the assistance would be deemed to have been provided with a positive
subsidy. If the latter were greater than the former, it would be a negative subsidy.
10 T he act specifies that the assistance should be recorded in the budget under FCRA (P.L. 101-508), which means that
the subsidy value of the assistance—as opposed to the total funds provided—is recorded as spending in the federal
budget. Some argue that the present discounted value calculation underestimates the size of the subsidy because it is
calculated using the government’s borrowing cost instead of a private borrowing rate that includes risk. In its cost
estimate of the CARES Act, CBO estimated a subsidy cost of $1 billion for the assistance to specified industries and
zero subsidy cost for assistance to Fed programs. CBO assumed that only half of the funds available for specific
industries would be lent out at a 10% subsidy rate and that the Fed programs would not be subsidized because the Fed’s
2008 programs did not suffer losses. However, as discussed below, the terms and purposes of some of the Fed’s
COVID-19 programs are fundamentally different from its 2008 programs. CBO, H.R. 748, CARES Act, P.L. 116-136,
April 16, 2020, https://www.cbo.gov/publication/56334. For more information, see CRS Report R44193, Federal
Credit Program s: Com paring Fair Value and the Federal Credit Reform Act (FCRA) , by Raj Gnanarajah.
11 U.S. T reasury, Exchange Stabilization Fund Statement of Financial Position , October 31, 2020, footnote 1,
https://home.treasury.gov/system/files/206/ESF-Monthly-FS-October-2020.pdf.
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discretion whether to seek compensation for this assistance and has sought compensation only for
larger grant recipients.
Treasury has broad discretion to decide how much of each part of the funding to make available
to the specified industries or the Fed, in what form, and for what purpose. These funds are made
available with certain terms and conditions, however (as discussed in the “Terms and Conditions”
section, below). For example, Section 4004 sets executive compensation limits on certain
companies receiving assistance, Section 4019 restricts eligible recipients of assistance to avoid
conflicts of interest, Sections 4114 and 4116 limit recipient firms from taking certain actions, and
Sections 4025 and 4115 prohibit conditioning assistance on entering into collective bargaining
negotiations.
In addition, several provisions provide enhanced oversight for the Title IV funding programs.
Sections 4018 and 4020 establish a special inspector general and a Congressional Oversight
Commission to monitor activities made pursuant to provisions in Title IV, and Section 4026
requires reports from the key agencies—namely Treasury and the Fed—on their Title IV
activities.
The next two sections focus on the financial assistance provisions granted to specified industries
and for Fed programs, updated as of December 30, 2020.
Loans, Loan Guarantees, and Other Support for Selected
Industries12
Congress chose to make direct Treasury support available to three specific industries (passenger
and cargo airline industries, as wel as certain national security businesses) that it deemed
particularly in need of support. This assistance may not meet certain statutory requirements for a
Federal Reserve program (i.e., that Federal Reserve assistance be broadly based and not for the
purpose of avoiding bankruptcy),13 and it comes with more terms and conditions than assistance
for recipients of Federal Reserve programs supported by the CARES Act. The Title IV support for
these industries comes in three main forms: loans and loan guarantees, suspension of certain
aviation excise taxes,14 and payroll grants for air carrier workers.
Loans and Loan Guarantees
Section 4003 makes up to $46 bil ion available for federal loans and loan guarantees directly
from Treasury to the aviation sector and to businesses critical to maintaining national security:
 not more than $25 bil ion for passenger air carriers, eligible businesses certified
to perform inspection, repair, replace, or overhaul services, and ticket agents;15

12 T his section was written by Rachel T ang.
13 12 U.S.C. §343.
14 Section 4007 institutes a suspension of excise taxes—including taxes on airline passenger ticket sales, segment fees,
air cargo fees, and aviation fuel taxes paid by both commercial and general aviation aircraft —until December 31, 2020.
T hese taxes and fees have been the primary revenue sources for the federal Airpo rt and Airways T rust Fund, which
support s multiple federal aviation programs. For details about the trust fund revenue sources, see CRS Report R42781,
Federal Civil Aviation Program s: In Brief, by Bart Elias and Rachel Y. T ang.
15 As defined in 49 U.S.C. §40102 (a)(45), ticket agent means a person (except an air carrier, a foreign air carrier, or an
employee of an air carrier or foreign air carrier) that as a principal or agent sells, offers for sale, negot iates for, or holds
itself out as selling, providing, or arranging for, air transportation. Contingent on the Department of T ransportation’s
(DOT ’s) interpretation “ ticket agents” include most travel agents that negotiate and sell airline tickets as part o f their
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 not more than $4 bil ion for cargo air carriers; and
 not more than $17 bil ion for “businesses critical to maintaining national
security”—a term that the act does not further define. On April 10, 2020, the
Treasury Secretary released information on which types of firms would be
eligible under this definition.16
The Treasury Secretary is required under Section 4006 to coordinate with the Transportation
Secretary to make these loans.17 Other terms and conditions applying to this assistance are
discussed in “Terms and Conditions,” below.
According to the Government Accountability Office (GAO), Treasury received 267 loan
applications and approved 35 loans under Title IV.18 Expedited loan applications were due in
April or May, the first loan was made in July, and most loans were not made until October 2020.
No loan guarantees have been made under Title IV. Direct loans approved under Title IV are
summarized in Table 1. As of the end of 2020, the Treasury had approved over $20.9 bil ion in
loans to 22 passenger air carriers, repair station operators, and ticket agents and $0.2 bil ion to
two cargo air carriers.19 Although Treasury cannot make new loans after the end of 2020,
companies can draw on approved loan balances until March 26, 2021. As of December 5, 2020,
the largest borrowers, accounting for most of the total amount approved, had drawn down only a
smal fraction of their approved loan amounts.20
With regard to the loan program for businesses critical to national security, as of the end of 2020,
the Treasury had approved $736 mil ion to 11 businesses under this program.21 Of particular note,
on June 30, 2020, the Treasury reached an agreement with YRC Worldwide, a trucking company,
to provide a $700 mil ion loan in exchange for a 29.6% equity stake.22 Treasury defined
businesses critical to maintaining national security as those that either have the highest priority
contract under the Defense Priorities Al ocations System regulations or those that operate under a
top secret facility security clearance under the National Industrial Security Program regulations.
Treasury stated that firms that do not meet either of these definitions may stil be considered for

travel products, including those conducting businesses online, such as expedia.com and booking.com.
16 T reasury defined businesses critical to maintaining national security as those that either have the highest priority
contract under the Defense Priorities Allocations System regulations or those that operate under a top secret facility
security clearance under the National Industrial Security Program regulations. T reasury stated that firms that do not
meet either of these definitions may still be considered for loans, however. See T reasury, Q&A: Loans to Air Carriers
and Eligible Businesses and National Security Businesses, updated as of April 10, 2020, at https://home.treasury.gov/
system/files/136/CARES-Airline-Loan-Support -Q-and-A-national-security.pdf. Reportedly, one intended recipient at
the time of enactment was the aerospace manufacturer Boeing. However, Boeing has not drawn a loan under T itle IV.
17 T reasury has issued procedures and minimum guidelines for applicants at https://home.treasury.gov/system/files/136/
Procedures%20and%20Minimum%20Requirements%20for%20Loans.pdf .
18 According to GAO, some applications were withdrawn by the applicant and some were rejected or deemed ineligible
by T reasury. See GAO, Financial Assistance: Lessons Learned from CARES Act Loan Program for Aviatio n and Other
Eligible Businesses, GAO-21-198, December 10, 2020, https://www.gao.gov/assets/720/711174.pdf.
19 T reasury, “Loans to Air Carriers, Eligible Businesses, and National Security Businesses,” data current as of
December 30, 2020, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/loans-to-air-
carriers-eligible-businesses-and-national-security-businesses.
20 T reasury, Report Under Section 4026(b)(1)(C) of the CARES Act, December 5, 2020, https://home.treasury.gov/
system/files/136/4026b1C-Loan-Report-12-05-2020.pdf.
21 T reasury, “Loans to Air Carriers, Eligible Businesses, and National Security Businesses,” data current as of
December 15, 2020.
22 T reasury, “UST T ranche A T erm Loan Credit Agreement,” July 7, 2020, https://home.treasury.gov/system/files/136/
YRC-Documentation.pdf.
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loans, however.23 For example, YRC Worldwide did not meet either definition, but the Treasury
stated that its decision was based on a certification by the Secretary of Defense that YRC, a
leading provider of critical military transportation and other hauling services to the federal
government, is critical to maintaining national security.24 Although the public disclosures do not
state on what grounds Treasury identified a business to be critical to national security, the
Congressional Oversight Commission reports that only five out of 11 recipients met one of
Treasury’s two explicit criteria, and the rest were approved at Treasury’s discretion.25
Proponents argued that these loans were important for maintaining U.S. jobs. In the transaction
summaries, Treasury reported the number of employees at these companies, which varied from
two to 157,000. Table 1 shows the range of loan amounts, terms, and employees at companies
that received assistance. Section 4003 requires the Secretary to set the terms of the loans such that
the interest rate reflects the loan’s risk but is not less than comparable interest rates before the
pandemic. To that end, the Secretary selected an adjustable rate with a markup on the London
Interbank Offered Rate (LIBOR),26 a commonly used reference rate. The markup varies based on
the Treasury’s perception of the loan’s riskiness. Section 4003 also requires financial protection
in the form of a warrant or equity interest in the case of a publicly traded company or a warrant,
equity interest, or senior debt instrument in the case of a company that is not publicly traded.
Except for YRC, Treasury accepted common stock warrants equal to 10% of the loan amount
drawn or 3% payment-in-kind annual interest.27
Table 1. Direct Loans Under Title IV
Data as of December 2020
Loan
Amount
Approved ($
Number of
Company
millions)
Interest Rate
Other Compensation
Employees
Passenger Air, Repair, and Ticket Agents ($20.9 bil ion of $25 bil ion approved)
American Airlines
$7,500.0
LIBOR+3.5%
common stock warrants
157,000
equal to 10% of loan drawn
United Airlines
$5,170.0
LIBOR+3%
common stock warrants
93,000
equal to 10% of loan drawn
JetBlue
$1,948.0
LIBOR+2.75%
common stock warrants
23,000
equal to 10% of loan drawn
Alaska Airlines
$1,928.0
LIBOR+2.5%
common stock warrants
22,000
equal to 10% of loan drawn

23 See T reasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security Businesses, updated as of
April 10, 2020, https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support -Q-and-A-national-
security.pdf.
24 According to the Congressional Oversight Commission, “YRC apparently did not meet either of the two national
security eligibility criteria.” See Congressional Oversight Commission, The Third Report of the Congressional
Oversight Com m ission, July 20, 2020, p. 14, at https://www.toomey.senate.gov/files/documents/
Oversight%20Commission%20-%203rd%20Report%20(FINAL)_7.20.20.pdf.
25 Congressional Oversight Commission, The Eighth Report of the Congressional Oversight Commission , December
31, 2020, pp. 10-11, https://coc.senate.gov/sites/default/files/2021-01/
COMMISSION%20December%20Report%2012 -31%20FINAL%2C%20appendix.pdf.
26 LIBOR is a short-term interbank borrowing rate.
27 T he value of these warrants to T reasury depends on the exercise price. CRS could not locate any info rmation on the
terms of the exercise price.
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Loan
Amount
Approved ($
Number of
Company
millions)
Interest Rate
Other Compensation
Employees
SkyWest
$725.0
LIBOR+3%
common stock warrants
15,000
equal to 10% of loan drawn
Hawai an Airlines, Inc.
$622.0
LIBOR+2.5%
common stock warrants
7,400
equal to 10% of loan drawn
Republic Airways
$58.0
LIBOR+3.5%
common stock warrants
6,700
equal to 10% of loan drawn
Frontier Airlines
$574.0
LIBOR+2.5%
common stock warrants
5,000
equal to 10% of loan drawn
Mesa Airlines, Inc.
$195.0
LIBOR+3.5%
common stock warrants
3,540
equal to 10% of loan drawn
Sun Country
$45.0
LIBOR+3.5%
3% payment-in-kind annual
1,630
interest
Southern Airways
$1.8
LIBOR+3.5%
3% payment-in-kind annual
458
Express, LLC
interest
Ovation Travel Group
$20.0
LIBOR+5.5%
3% payment-in-kind annual
250
interest
Caribbean Sun Airlines,
$6.8
LIBOR+3.5%
3% payment-in-kind annual
173
Inc.
interest
Eastern Airlines, LLC
$15.0
LIBOR+3.5%
3% payment-in-kind annual
137
interest
Elite Airways LLC
$2.6
LIBOR+3.5%
3% payment-in-kind annual
110
interest
American Jet
$1.2
LIBOR+3.5%
3% payment-in-kind annual
44
International Corp.
interest
Al flight Corp.
$4.7
LIBOR+3.5%
3% payment-in-kind annual
35
interest
Timco Engine Center,
$8.4
LIBOR+3.5%
3% payment-in-kind annual
25
Inc.
interest
Thomas Global Systems
$1.4
LIBOR+3.5%
3% payment-in-kind annual
20
LLC
interest
Bristin Travel
$0.5
LIBOR+3.5%
3% payment-in-kind annual
12
interest
Aviation Management &
$4.0
LIBOR+3.5%
3% payment-in-kind annual
6
Repairs, Inc.
interest
Aero Hydraulics
$0.5
LIBOR+5.5%
3% payment-in-kind annual
2
interest
Cargo Air Carriers ($0.2 bil ion of $4 bil ion approved)
Legacy Airways
$1.8
LIBOR+5.5%
3% payment-in-kind annual
19
interest
Island Wings, Inc.
$0.3
LIBOR+3.5%
3% payment-in-kind annual
n/a
interest
Businesses Critical to National Security ($0.7 bil ion of $17 bil ion approved)
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Loan
Amount
Approved ($
Number of
Company
millions)
Interest Rate
Other Compensation
Employees
SemahTronix, LLC
$2.0
LIBOR+3.5%
3% payment-in-kind annual
172
interest
Wiser Imagery Services,
$3.1
LIBOR+5.5%
3% payment-in-kind annual
135
LLC
interest
SpinLaunch, Inc.
$2.5
LIBOR+3.5%
3% payment-in-kind annual
66
interest
Semantic AI, Inc.
$0.5
LIBOR+3.5%
3% payment-in-kind annual
51
interest
Map Large, Inc.
$10.0
LIBOR+5.5%
3% payment-in-kind annual
37
interest
Core Avionics &
$6.0
LIBOR+5.5%
3% payment-in-kind annual
25
Industrial, Inc.
interest
Meridian Rapid Defense
$7.1
LIBOR+5.5%
3% payment-in-kind annual
14
Group, LLC
interest
Visual Semantics, Inc.
$1.1
LIBOR+5.5%
3% payment-in-kind annual
9
interest
Channel Logistics, LLC
$2.5
LIBOR+3.5%
3% payment-in-kind annual
6
interest
oVio Technologies, Inc.
$1.2
LIBOR+5.5%
3% payment-in-kind annual
6
interest
YRC Worldwide
$700.0
LIBOR+3.5%
29.6% of common stock
n/a
Source: U.S. Treasury, various transaction summaries, at https://home.treasury.gov/policy-issues/cares/
preserving-jobs-for-american-industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.
Notes: Al information as reported by Treasury. Recipients have until March 26, 2021, to draw the ful amount
of the loan approved. LIBOR is the London Interbank Offered Rate, a short-term interbank borrowing rate.
Air Carrier Worker Support28
Section 4120 appropriates $32 bil ion to assist aviation workers. From this amount, Section 4112
al ows the Treasury Secretary to provide
 up to $25 bil ion for passenger air carriers,
 up to $4 bil ion for cargo air carriers, and
 up to $3 bil ion for contractors who provide ground services—such as catering
services or on-airport functions—directly to air carriers.
Al such assistance must be used exclusively for continuing the payment of employee wages,
salaries, and benefits. Section 4117 gives the Treasury Secretary discretion to determine what
compensation to seek for this assistance. Treasury announced it would not seek compensation
from recipients receiving less than a minimum amount under the program. However, Treasury
determined that passenger air carriers receiving payroll support of more than $100 mil ion, cargo

28 For detailed analysis of the payroll support program, see CRS Insight IN11482, CARES Act Payroll Support to Air
Carriers and Contractors, by Rachel Y. T ang.
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

air carriers receiving more than $50 mil ion, and eligible contractors receiving more than $37.5
mil ion are required to provide financial instruments as appropriate compensation. For
compensation, a fraction of the support above the minimum value must be repaid over 10 years
with a 1% interest rate for the first five years (and an adjustable interest rate thereafter).29
Compensation also included 3% payment-in-kind interest for privately held companies and
warrants for publicly held companies that would have value to the Treasury only if the recipient’s
share price rises above its value on April 9, 2020 during the next five years.30 The Treasury
Secretary is required to coordinate with the Transportation Secretary in implementing the relief
for aviation workers.
Section 4113 indicates that eligible airlines or contractors would receive an amount equal to their
2019 second- and third-quarter (from April 1, 2019 through September 30, 2019) salaries and
benefits. If it were determined that the aggregate amount of eligible financial assistance exceeds
the amount available, the Treasury Secretary would provide the available aid on a pro rata basis.
As of the end of 2020, more than $28 bil ion in payroll support had been approved for
disbursement to 611 recipients—nearly $25 bil ion to 352 passenger air carriers (some operating
unscheduled service), $828 mil ion to 38 cargo carriers, and over $2.4 bil ion to 220 aviation-
sector contractors. Of these, 32 recipients, receiving $26 bil ion of the payroll support, were
required to provide compensation.31 Authority to issue payroll grants has not expired. However,
the funding available for passenger air was nearly depleted by October, and the statutory
requirement that recipients refrain from involuntary furloughs or pay-rate reductions expired on
September 30, 2020.
CARES Act Funding Available to the Federal Reserve32
The Federal Reserve, as the nation’s central bank, was created as a “lender of last resort” to the
banking system when private sources of liquidity become unavailable.33 This role is minimal in
normal conditions but has been important in periods of financial instability. Less frequently
throughout its history, the Fed has also provided liquidity to firms that were not banks. In the
2007-2009 financial crisis, the Federal Reserve created a series of temporary facilities to lend to
or purchase securities of nonbank financial firms and markets under emergency authority found
in Section 13(3) of the Federal Reserve Act.34 It did so again in response to COVID-19, even
before enactment of the CARES Act.35
Although the CARES Act does not preclude the Fed from independently responding to COVID-
19 using its own funds, it is left to the Treasury Secretary to decide whether and how much of the

29 Loans were set equal to 30% of any amount a passenger airline received above $100 million, 56% of any amount a
cargo airline received above $50 million, and 44% of any amount a contractor received above $37.5 million.
30 T erms and transaction information is available at https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-
american-industry/payroll-support-program-payments.
31 As of December 31, 2020, the most recent data on T reasury’s website is as of November 16, 2020. As T reasury is
required to report new transactions on its website within 72 hours, this suggests that no new transactions have occurred
in the intervening weeks. CRS calculations based on T reasury, “ Payroll Support Program Payments,”
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-program-
payments.
32 T his section was written by Marc Labonte.
33 For background on the Fed, see CRS In Focus IF10054, Introduction to Financial Services: The Federal Reserve, by
Marc Labonte.
34 12 U.S.C. §343.
35 For more information, see CRS Report R46411, The Federal Reserve’s Response to COVID-19: Policy Issues, by
Marc Labonte.
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CARES Act funds to provide to the Fed and on what general terms. After deducting assistance
provided to the three specified industries, the remainder of the $500 bil ion—at least $454
bil ion—is available for Treasury to make loans, loan guarantees, or investments in programs or
facilities established by the Fed to “provid(e) liquidity to the financial system that supports
lending to eligible businesses, states, or municipalities.” As noted in the “Financial Assistance in
Division A, Title IV” section, eligible businesses and states are defined by the act. The Fed’s
facilities may make loans, purchase newly issued obligations (e.g., debt securities) directly from
issuers in primary markets, or purchase seasoned obligations from investors in secondary
markets.
The act provides Treasury and the Fed broad discretion on how to structure these programs or
facilities. (Terms and conditions applying to this assistance are discussed in the section titled
“Terms and Conditions.”) Theoretical y, the transactions could be structured in many different
ways. In practice, Treasury has used CARES Act funding to make equity investments in Fed
facilities as a backstop to cover any future losses, as described below.
The act envisions the Fed using CARES Act funding to help two broad groups that had not been
the targets of Fed emergency lending programs up to that point: (1) states (as defined by the act)
and municipalities; and (2) medium-sized businesses, defined as those with between 500 and
10,000 employees, including nonfinancial businesses. Prior to the pandemic, the Fed had not lent
to or purchased the securities of nonfinancial businesses and states and municipalities since the
1930s.36 The act encourages, but does not require, the Fed to work with the Treasury Secretary to
create programs assisting these two groups and does not limit Fed assistance to these two groups
only.
Since enactment, the Fed has created programs to aid states and municipalities (the MLF) and
smal - to medium-sized businesses (the MSLP). The intended recipient (medium-sized
businesses) and purpose (to maintain employment) of the proposed facility are similar to the
Fed’s MSLP (described below), but the terms differ.
Federal Reserve Emergency Facilities Backed by CARES Act Funding
In response to COVID-19, the Fed created several temporary emergency programs under Section
13(3) backed by Treasury investments using CARES Act funding. These facilities became fully
operational between May 12, 2020, and September 4, 2020.37 On November 19, 2020, Treasury
Secretary Mnuchin effectively terminated the facilities at the end of 2020.38 The facilities were:39

36 Howard Hackley, Lending Functions of the Federal Reserve Banks, Federal Reserve, 1973, p. 130. See also David
Fettig, Lender of More Than Last Resort, Federal Reserve Bank of Minneapolis, December 1, 2002,
https://www.minneapolisfed.org/publications/the-region/lender-of-more-than-last-resort; James Dolley, “ T he Industrial
Advance Program of the Federal Reserve System,” Quarterly Journal of Econom ics, vol. 50, no. 2 (February 1936), p.
229; and David H. Small and James A. Clouse, The Scope of Monetary Policy Actions Authorized Under the Federal
Reserve Act, Federal Reserve, Working P aper, July 19, 2004, https://www.federalreserve.gov/pubs/feds/2004/200440/
200440pap.pdf.
37 GAO, Federal Reserve Lending Programs: Use of CARES Act -Supported Programs Has Been Limited and Flow of
Credit Has Generally Improved, GAO-21-180, December 10, 2020, https://www.gao.gov/assets/720/711141.pdf.
38 T reasury Secretary Mnuchin, letter to Federal Reserve Board Chairman Powell, November 19, 2020,
https://home.treasury.gov/system/files/136/letter11192020.pdf. Later, the MSLP was extended until January 8 in order
to allow loan applications received before December 14 to be processed. See the section below entitled “ Winding
Down CARES Act Programs.”
39 U.S. T reasury, Exchange Stabilization Fund Statement of Financial Position , October 31, 2020, footnote 2. In
addition, the Fed created two facilities backed by ESF funding that are not identified as subject to the CARES Act —the
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

 Primary Market Corporate Credit Facility (PMCCF) and Secondary
Market Corporate Credit Facility (SMCCF). The Fed created two new
facilities to support corporate bond markets—the PMCCF to purchase newly
issued corporate debt and syndicated loans from issuers and the SMCCF to
purchase existing corporate debt or corporate debt exchange-traded funds on
secondary markets.40 The issuer was required to have material operations in the
United States and could not receive direct federal financial assistance related to
COVID-19. The SMCCF began purchasing securities in May with the goal of
holding a broad portfolio. In its last monthly report to Congress, the Fed stated
that the PMCCF had not purchased any debt as of November 30.41
 Term Asset-Backed Securities Loan Facility (TALF). To support asset-backed
securities (ABS) markets, the TALF made nonrecourse, three-year loans to
private investors to purchase newly issued, highly rated ABS backed by various
types of nonmortgage loans.42 Eligible ABS included those backed by certain
auto loans, student loans, credit card receivables, equipment loans, floorplan
loans, insurance premium finance loans, smal business loans guaranteed by the
Smal Business Administration (SBA), commercial real estate, or leveraged loans
or servicing advance receivables.
 Main Street Lending Program (MSLP). The MSLP bought new or expanded
loans from depository institutions that were five-year loans to businesses and
nonprofits with up to 15,000 employees or up to $5 bil ion in revenues. The loans
deferred principal for two years and interest repayment for one year, and
borrowers had to make a “reasonable effort” to retain employees. This program
was particularly attractive to businesses too large to qualify for SBA assistance,
such as the Paycheck Protection Program.43 The MSLP consisted of five
facilities. Eligibility for each facility depended on the type of loan and type of
borrower. “Medium-sized” businesses may have been too smal to issue publicly
traded debt securities that the Fed was purchasing through the PMCCF and
SMCCF and too large to qualify for SBA assistance provided by the CARES Act,
such as the Payroll Protection Program.44
 Municipal Liquidity Facility (MLF). The MLF purchased shorter-term state
and municipal debt in response to higher yields and reduced liquidity in that
market. The facility purchased only tax or revenue anticipation debt of states,

Commercial Paper Funding Facility and the Money Market Liquidity Facility. T he Fed also created emergency
facilities in response to COVID-19 that did not involve CARES Act funding. For information on those facilities, see
CRS Insight IN11327, Federal Reserve: Em ergency Lending in Response to COVID-19, by Marc Labonte.
40 Federal Reserve, “Federal Reserve Announces Extensive New Measures to Support the Economy,” press release,
March 23, 2020, at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200323b.htm (hereinafter
cited as Federal Reserve, “New Measures to Support the Economy ”).
41 Federal Reserve, Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board Under Section
13(3) of the Federal Reserve Act, September 7, 2020, https://www.federalreserve.gov/publications/files/pdcf-mmlf-
cpff-pmccf-smccf-talf-mlf-ppplf-msnlf-mself-mslpf-nonlf-noelf-9-8-20.pdf#page=3. T he Fed’s weekly disclosures do
not include a breakdown of activity between the PMCCF and SMCCF.
42 Federal Reserve, “New Measures to Support the Economy.”
43 For more information, see CRS In Focus IF11632, The Federal Reserve’s Main Street Lending Program , by Marc
Labonte and Lida R. Weinstock.
44 For CARES Act assistance to small businesses through SBA programs, see CRS Report R46284, COVID-19 Relief
Assistance to Sm all Businesses: Issues and Policy Options, by Robert Jay Dilger, Bruce R. Lindsay, and Sean Lowry .
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larger counties (with at least 500,000 residents), and larger cities (with at least
250,000 residents). However, states without at least two counties and cities that
met the minimum population limit could designate any combination of their two
largest counties or cities to participate.45
Table 2 summarizes how much CARES Act funding was pledged to each facility. In total, $195
bil ion was pledged.46 Several modifications were made to the facilities over the course of their
operation to make them more attractive to recipients. Nevertheless, when the facilities closed at
the end of 2020, outstanding assistance was smal ($41.1 bil ion) relative to their announced size
(a combined $1.95 tril ion). As discussed below, the Fed and Treasury agreed to reduce this
amount because it exceeds potential losses.
Table 2. Federal Reserve COVID-19 Emergency Programs Backed by CARES Act
Funding
(bil ions of dol ars)

Federal Reserve Funds
Treasury (ESF)
Assistance

Announced Size Limit
Outstanding 12/30/20
CARES Funds Pledged
Facilities Announced Prior to Enactment of CARES Act
Primary Market
Corporate Credit
$750
$14.1
$75
Facility/Secondary Market
Corporate Credit Facility
Term Asset-Backed
$4.1
Securities Loan Facility
$100
$10
Facilities Announced Since Enactment of CARES Act
Main Street Lending
Programa
$600
$16.5
$75
Municipal Liquidity Facility
$500
$6.4
$35
Total
$1,950
$41.1
$195
Source: CRS based on various Federal Reserve documents and U.S. Treasury, Exchange Stabilization Fund
Statement of Financial Position, July 31, 2020, footnote 2, https://home.treasury.gov/system/files/206/
ESF_July_Trunc_Footnotes-82720.pdf.
Note: See the “Federal Reserve Emergency Facilities Backed by CARES Act Funding” section for details.
a. There are five facilities under the Main Street Lending Program—the Main Street New Loan Facility, the
Main Street Priority Loan Facility, the Main Street Expanded Loan Facility, the Nonprofit Organization New
Loan Facility, and the Nonprofit Organization Expanded Loan Facility.
These facilities extended the Fed’s traditional “lender of last resort” role for banks to be the
“buyer of last resort” for broad segments of financial markets that have become il iquid due to
COVID-19 and “lender of last resort” for nonfinancial firms. The 2020 facilities go beyond the
scope of the 2008 facilities by purchasing loans of nonfinancial businesses and debt of states and
municipalities. In some programs, the Fed purchases securities in affected markets directly. In
other programs, the Fed makes loans to financial institutions or investors to intervene in affected

45 For more information, see CRS In Focus IF11621, COVID-19: The Federal Reserve’s Municipal Liquidity Facility,
by Grant A. Driessen and Marc Labonte.
46 An additional $20 billion in ESF funding was pledged for Fed programs not subject to the CARES Act.
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markets; these loans are typical y made on attractive terms to incentivize activity, including by
shifting the credit risk to the Fed.
The loans and asset purchases of the facilities are funded by the Fed using its resources. By law,
the Fed must structure these facilities to avoid expected losses, and the facilities charge users
interest and/or fees as compensation.47 To that end, Treasury has pledged ESF funds for each of
these facilities to protect the Fed from future losses—although these losses would stil be borne
by the federal government.48 Because of the long maturity of some of these transactions, losses, if
any, wil not be realized for some time after the facilities have expired. The Treasury Secretary
approved the creation of each facility. The facilities have been structured as special purpose
vehicles (SPVs) created and controlled by the Fed. This structure facilitates the pooling of Fed
and Treasury funds and avoids legal restrictions on the purchase of assets that are ineligible for
purchase under the Federal Reserve Act, such as corporate debt. Although legal y separated from
the Fed, income and losses from the SPVs stil flow to the Fed (and Treasury, in cases where ESF
funds are pledged), and the SPVs appear on the Fed’s consolidated balance sheet.
The Fed created similar emergency facilities, some backed by ESF, that are not subject to the
CARES Act during the pandemic.49 This distinction determines which programs are subject to the
terms and conditions of the CARES Act, however, which are summarized in Table 3.
There was talk of how the Fed could “leverage” the CARES Act funding of $454 bil ion (or
more) into greater amounts of assistance by combining it with the Fed’s funds.50 Although the use
of this term is more colloquial than technical from a financial perspective, Table 2 il ustrates how
this was accomplished. For example, the MLF had planned to purchase up to $500 bil ion of
assets using $35 bil ion of CARES Act funding.
Terms and Conditions51
Title IV sets forth a number of terms and conditions for the assistance provided. Some of these
provisions apply broadly to both assistance extended to the Fed and the specified industries, and
others apply only to specified industries. Table 3 compares and contrasts the various terms and
conditions for each of these programs. Oversight and reporting requirements associated with the
assistance are discussed in more detail in the section titled “Oversight Provisions.”

47 12 U.S.C. §343.
48 T he ESF was not used to backstop Section 13(3) programs in 2008, but some programs were backed by other
T reasury funds.
49 Fed facilities have not been identified as subject to the CARES Act based on when the facility was announced or
whet her it is backed by ESF funding. Before enactment of P.L. 116-136, T reasury had already made equity investments
through the ESF in some Fed emergency programs created in response to COVID-19. T he MSLP and the MLF were
announced after the CARES Act’s enactment . All other facilities were created or announced before the CARES Act.
50 See, for example, Jeanna Smialek, “ How the Fed’s Magic Money Machine Will T urn $454 Billion Into $4 T rillion,”
New York Tim es, March 26, 2020, at https://www.nytimes.com/2020/03/26/business/economy/fed-coronavirus-
stimulus.html.
51 T his section was written by Andrew Scott, Marc Labonte, and Rachel T ang.
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Table 3. Comparison of Terms and Conditions Applying to the $500 Billion Provided
to the Exchange Stabilization Fund (ESF)
Specified Industry
Section(s) of
Assistance/Air Carrier
Federal Reserve
the CARES
Term
Worker Support
Programs
Act
Treasury may make loans or loan
Applies to specified
Applies
4003
guarantees
industry loans
Treasury may make investments
Does not apply
Applies
4003
Eligible borrowers affected by
Businesses related to air
As defined, eligible
4003(b)
COVID-19
carriers, cargo air carriers,
businesses, states, and
4013
or businesses critical to
municipalities
maintaining national
security; worker support
applies to certain air
carriers and contractors
Secretary sets terms, conditions,
Applies to specified
Applies
4003(c)(1)
etc. on CARES Act funding
industry loans and air
4113
carrier worker support
10-day deadline for releasing
Applies to specified
Does not apply
4003(c)(1)
application procedures
industry loans
Secretary determination that credit
Applies to specified
Does not apply
4003(c)(2)
is not available, assistance is
industry loans and
prudent, firm has losses; interest
guarantees
rate reflects risk and market rates
before crisis
Duration is as short as practicable
Applies to specified
Does not apply
4003(c)(2)
and no more than five years
industry loans and
guarantees
Share buybacks/dividends
Applies to specified
Applies to direct loans
4003(c)(2)
prohibited until 12 months after
industry loans for 12
only, Secretary may waiveb
4003(c)(3)
repayment
months after repayment;c
applies to air carrier
worker support through
September 2021
Maintaining employment levels
Applies to specified
Does not applyb
4003(c)(2)
required
industry loans up to 4
4114
months after pandemic;d
applies to air carrier
worker support through
September 2020a
Limited to U.S. businesses
Applies to specified
Applies
4003(c)(3)
industry loanse
Equity, warrants, or other
Required for loans to
Does not apply
4003(d)
compensation to government
specified industries; at
4117
Treasury’s discretion for air
carrier worker support
Assistance ineligible for loan
Applies to specified
Applies
4003(d)
forgiveness
industry loans
Order of priority on repayment of
Applies to specified
Applies
4003(e)
funds
industry loans
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Specified Industry
Section(s) of
Assistance/Air Carrier
Federal Reserve
the CARES
Term
Worker Support
Programs
Act
Administrative authority
Applies to specified
Applies
4003(f)
industry loans
Use of private financial agents
Applies to specified
Applies
4003(g)
industry loans
Tax treatment for recipient
Applies to specified
Applies
4003(h)
industry loans
Executive compensation
Applies to specified
Applies to direct loans
4004
restrictions
industry loans through 12
only, Secretary may waive
4116
months after receipt of
loan; applies to air carrier
worker support through
March 24, 2022f
Air carrier’s continued service
Applies to specified
Does not apply
4005
obligation
industry loansg
4113
Special inspector general
Applies to specified
Applies to Treasury
4018
jurisdiction
industry loans
activities
Conflicts of interest
Applies to specified
Applies
4019
industry loansh
Congressional Oversight
Applies to specified
Applies
4020
Commission jurisdiction
industry loans
Col ective bargaining agreements
Applies to specified
Does not apply
4025
industry loansi and air
4115
carrier worker support
programsj
Reporting, testimony requirements
Applies to specified
Applies (subject to 12
4026
industry loan programs and
U.S.C. §343(3)
4118
air carrier worker support
requirements)
programs
Public release of assistance or
Applies to specified
Does not apply
4026
administrative contract agreements
industry loans
Government Accountability Office
Applies to specified
Applies
4026
studies
industry loans
Appropriations
Section 4027 of the CARES
Section 4027 of the
4027
Act appropriates funds to
CARES Act appropriates
4119
ESF for Treasury loans;
funds to ESF for Treasury
Section 4119 appropriates
investments in Fed
funds for the air carrier
facilities
worker support program
Limits terms and conditions to be in Applies to specified
Applies
4028
federal government’s self interest
industry loans
Termination of authority
New loans and guarantees

4029
cannot be made after 2020
Source: CRS analysis of terms and conditions found in Title IV of the CARES Act.
Notes: Secretary refers to Treasury Secretary. Specified industries refers to firms that are related to commercial
airlines, cargo airlines, or those “critical to maintaining national security.” Descriptions in the first column would
also apply to loan guarantees, but no loan guarantees were made under Title IV. Descriptions are summarized—
see the table notes for more detail.
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a. To be eligible for grants to cover employee salaries under Section 4113, an air carrier or contractor must
agree to refrain from conducting involuntary furloughs or reducing pay rates and benefits until September
30, 2020.
b. The table does not include a number of restrictions that apply only to a Fed facility for mid -size businesses.
c. The agreement must provide that neither the borrower nor any affiliate may engage in stock buybacks,
unless contractual y obligated to do so, or pay dividends until 12 months after the date the loan is no longer
outstanding.
d. Until September 30, 2020, the borrower must maintain its employment levels as of March 24, 2020, to the
extent practicable, and may not reduce its employment levels by more than 10% from the levels on that
date.
e. The borrower must certify that it is a U.S.-domiciled business with significant operations in and a majority of
its employees based in the United States
f.
Treasury may enter into an agreement to make a loan only if the borrower agrees to specified limitations
on the compensation and severance pay of executives and employees whose total compensation exceeded
$425,000 in calendar year 2019. Total compensation, as defined in the act, is capped at the individual’s 2019
compensation level, or if compensation exceeds $3 mil ion, it is also capped at $3 mil ion plus 50% of the
2019 compensation level above $3 mil ion. Further, severance pay for those individuals is capped at twice
the individual’s 2019 compensation level.
g. Section 4005 requires an air carrier receiving financial assistance under the act to maintain scheduled air
transportation service, as the Transportation Secretary deems necessary, to ensure services to any point
served by that air carrier before March 1, 2020, taking into consideration the air transportation needs of
smal and remote communities and the needs of health care and pharmaceutical supply chains. Such
authority and any requirements issued shal terminate on March 1, 2022. In addition, the Transportation
Secretary is authorized to require, to the extent practicable, that an air carrier receiving this support
continue services to any point served by that carrier before March 1, 2020, considering factors similar to
those described above for airline loans under Section 4005.
h. Section 4019 establishes that certain entities are ineligible to participate in Section 4003 transactions. An
ineligible entity is a covered individual who owns a control ing interest in that entity (defined as “not less
than 20 percent, by vote or value, of the outstanding amount of any class of equity interest in an entity”).
Covered individuals are the President, the Vice President, an executive department head, a Member of
Congress, or the spouse, child, or spouse of a child of any of those individuals.
i.
Section 4025 prohibits any federal entity from conditioning the issuance of a loan or loan guarantee under
provisions in Section 4003 on an air carrier’s or eligible business’s implementation of measures to enter into
negotiations with the certified bargaining representative of a craft or class of employees of the air carrier or
eligible business under the Railway Labor Act (45 U.S.C. §§151 et seq.) or the National Labor Relations Act
(29 U.S.C. §§151 et seq.) regarding pay or other terms and conditions of employment.
j.
Section 4115 prohibits Treasury and other federal agencies from conditioning the provision of payrol
support payments on the applicant’s “implementation of measures to enter into negotiations with the
certified bargaining representative of a craft or class of employees of the applicant under the Railway Labor
Act (45 U.S.C. §§151 et seq.) or the National Labor Relations Act (29 U.S.C. §§151 et seq.) regarding pay or
other terms or conditions of employment” through September 30, 2020.
Terms and Conditions and Restrictions for the Federal Reserve Facilities
As shown in Table 3, some, but fewer, of the terms and conditions and restrictions placed on the
industry assistance also apply to the Fed. Fed assistance may go only to U.S. businesses (as
defined), and the conflict of interest and reporting requirements also apply to the Fed. Restrictions
on executive compensation and capital distributions (stock buybacks and dividends) do not apply
to Fed programs unless the Fed is providing direct loans to recipients; in the case of the Fed
programs, the Treasury Secretary may waive these requirements “to protect the interests of the
Federal Government.” These restrictions were applied only to the Main Street Lending Program.
Likewise, requirements to provide the government with warrants or other forms of compensation
do not apply to the Fed programs. Fewer restrictions may have been placed on Fed programs than
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

industry assistance because of the Fed’s independence from Congress and the Administration, and
because most of the Fed programs are not intended to prevent recipients’ imminent failure.52
In addition to the conditions and restrictions in the CARES Act, Section 13(3) of the Federal
Reserve Act places a number of restrictions on the Fed’s facilities, many of which were added or
augmented by the Dodd-Frank Act (P.L. 111-203).53 For example, actions taken under Section
13(3) must be broadly based and “for the purpose of providing liquidity to the financial system,
and not to aid a failing financial company.” Actions must also provide security (e.g., col ateral)
that is sufficient to protect the taxpayer and is based on sound risk management practices, which
is why the Fed requested CARES Act funding to backstop the facilities. Unlike financial firms,
some entities impacted by COVID-19 may not have securities that can be posted as collateral.
Oversight Provisions54
To provide oversight of Title IV, the CARES Act created a special inspector general,
Congressional Oversight Commission, and various reporting requirements.
Special Inspector General for Pandemic Recovery55
Section 4018 establishes a Special Inspector General for Pandemic Recovery (SIGPR) within
Treasury. The SIGPR is nominated by the President with the advice and consent of the Senate56
and may be removed from office in the manner prescribed in Section 3(b) of the Inspector
General Act of 1978.57 The SIGPR is tasked with conducting audits and investigations of
Treasury’s activities pursuant to the CARES Act, including collecting and summarizing
information regarding loans provided by Treasury.
The SIGPR is empowered to hire staff, enter into contracts, and broadly exercise the same
authority and status as inspectors general under the Inspector General Act of 1978.58 The SIGPR
is required to report to the appropriate committees of Congress within 60 days of Senate
confirmation, and quarterly thereafter, on the activities of the office over the preceding three
months, including detailed information on Treasury loan programs.59 The SIGPR position
terminates five years after the enactment of the CARES Act (i.e., March 27, 2025).

52 If the Fed were to create the medium-sized business lending program envisioned in Section 4003, additional terms
and restrictions would apply to that facility.
53 For more information, see CRS Report R44185, Federal Reserve: Emergency Lending, by Marc Labonte.
54 T his section was written by Ben Wilhelm. For more on the CARES Act oversight provisions, see CRS Report
R46315, Congressional Oversight Provisions in the Coronavirus Aid, Relief, and Econom ic Security (CARES) Act
(P.L. 116-136), by Ben Wilhelm and William T . Egar.
55 For more on the Special Inspector General for Pandemic Recovery (SIGPR), please see CRS Insight IN11328,
Special Inspector General for Pandem ic Recovery: Responsibilities, Authority, and Appointm ent , by Ben Wilhelm.
56 T he current SIGPR is Brian D. Miller, who was nominated by President T rump on April 6, 2020, and confirmed by
the Senate on June 2, 2020. He formerly served as a senior associate counsel in the Office of the House Counsel.
57 5 U.S.C. Appendix.
58 See also CRS Report R45450, Statutory Inspectors General in the Federal Government: A Primer, by Kathryn A.
Francis.
59 T he SIGPR is also required under Section 4020(e)(4)(B) to report to the appropriate committees “whenever
information or assistance requested by the Special Inspector General is, in the judgment of the Special Inspector
General, unreasonably refused or not provided.” T he Administration objected to this provision in a signing stateme nt,
available at https://www.whitehouse.gov/briefings-statements/statement -by-the-president -38/.
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From the $500 bil ion appropriated in Title IV, Section 4018 directs that $25 mil ion shal be
made available to the SIGPR as a nonexpiring appropriation.
Congressional Oversight Commission60
Section 4020 establishes a five-member Congressional Oversight Commission in the legislative
branch. The commission is directed to oversee implementation of Subtitle A of Title IV by the
federal government and to issue regular reports to Congress.
The commission is directed to report to Congress “not later than 30 days after the first exercise by
the Secretary and the Board of Governors of the Federal Reserve System of the authority under
this subtitle and every 30 days thereafter.”
The commission is authorized to hold hearings and gather evidence, obtain data and other
information from federal agencies upon request, hire staff, obtain the services of outside experts
and consultants, request the detail of federal employees, and enter into contracts to discharge its
duties.
Members of the commission are to be appointed by the Speaker of the House, the Senate majority
leader, the House minority leader, and the Senate minority leader.61 To date, congressional leaders
have not appointed a head of the commission.
Funding for the commission’s expenses is to be derived in equal amounts from the contingency
fund of the Senate and an “applicable” account of the House. The Treasury Secretary and the
Federal Reserve Board of Governors are instructed to “promptly” transfer funds to such accounts
for the reimbursement of commission expenses.
Schedule for Reports, Disclosures, and Testimony
COC and the SIGPR are now operational and, together with GAO, have begun to provide
required reports to Congress.
 GAO. GAO has issued four reports as of December 2020.62 These reports have
focused on issues including improvements to data being provided by the Treasury
and strengthening planning and coordination for elements of the federal response.
 COC. The COC has issued seven reports since its creation,63 the most recent of
which was released November 30, 2020.64 COC has provided both general
reports on the activities of the Treasury and the Fed and more detailed reports on
individual transactions.
 SIGPR. The SIGPR recently launched its website, which includes links to
reports, news releases on SIGPR activity, and contact information, including a

60 For more on the Congressional Oversight Commission, please see CRS Insight IN11304, COVID-19 Congressional
Oversight Com m ission (COC), by Jacob R. Straus and William T . Egar.
61 T he Speaker of the House, Senate majority leader, House minority leader, and Senate min ority leader are each
authorized to appoint one member of the Congressional Oversight Commission. A fifth member is to be appointed
jointly by the Speaker and Senate majority leader after consultation with the House and Senate minority leaders. T his
member is to serve as chairperson of the commission.
62 Available at https://www.gao.gov/coronavirus/newest_covid-related_reports.
63 Available at https://coc.senate.gov/.
64 Congressional Oversight Commission, The Sixth Report of the Congressional Oversight Commission, October 29,
2020, https://coc.senate.gov/sites/default/files/2020-10/The%20Sixth%20Report_Final%20%28002%29_0.pdf .
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hotline for individuals to report information to the office.65 The SIGPR submitted
its most recent report to Congress on September 30, 2020,66 and noted that the
office has already opened 21 preliminary investigations and is actively working
with other inspectors general to investigate al egations of improper activity.67 The
report also offered two recommendations for Congress. First, the SIGPR
recommended passage of the SIGPR Expedited Hiring Authorities Act of 2020.68
Second, the SIGPR recommended that Congress adjust the due date for its
reports to Congress to “30 days after the end of a calendar quarter” to align with
submission schedules for other inspector general offices.69
In addition to the establishment of the SIGPR and the COC, Title IV requires the Treasury
Secretary and the Fed Chair to issue reports, make disclosures, and provide testimony before
congressional committees for a number of specified purposes:
 The Fed has issued monthly reports to Congress describing the purpose and
details of each facility.70 In these reports and accompanying transaction records,
the Fed has disclosed “names and details of participants in each facility; amounts
borrowed and interest rate charged; and overal costs, revenues, and fees for each
facility.”71 Total loans or asset purchases through the facilities are published
weekly as part of the Fed’s balance sheet.72 The Fed also provides details on
emergency facilities’ activities in quarterly reports.73
 Treasury reports monthly on its investment of ESF funds in the Fed’s programs.74
In addition, the CARES Act requires Treasury to publish a description of
assistance on its website within 72 hours, a report every 14 days for one year
following enactment and every 30 days thereafter summarizing actions in that
period, and summaries on loan and guarantee programs every 30 days.75
Collectively, these provisions require disclosure to Congress and the public of financial and other
details on each transaction under Section 4003(b). These requirements are detailed in Table 4.

65 https://www.sigpr.gov/.
66 SIGPR, Quarterly Report to Congress, September 30, 2020, https://www.sigpr.gov/sites/sigpr/files/2020-09/SIGPR-
Quarterly-Report -to-Congress-September-30-2020_0.pdf.
67 SIGPR, Quarterly Report to Congress, September 30, 2020, p. 7.
68 S. 3751 (116th Congress).
69 SIGPR, Quarterly Report to Congress, September 30, 2020, p. 8.
70 See Federal Reserve, “ Reports to Congress Pursuant to Section 13(3) of the Federal Reserve Act in response to
COVID-19,” https://www.federalreserve.gov/publications/reports-to-congress-in-response-to-covid-19.htm.
71 Federal Reserve, “Federal Reserve Board Outlines the Extensive and T imely Public Information It Will Make
Available Regarding Its Programs to Support the Flow of Credit to Households and Businesses and T hereby Foster
Economic Recovery,” press release, April 23, 2020, https://www.federalreserve.gov/newsevents/pressreleases/
monetary20200423a.htm. For emergency facilities that are not identified as CARES Act facilities in Table 2 (with the
exception of the Paycheck Protection Program Liquidity Facility), the Fed has not provided monthly transaction
records. However, these facilities are subject to Dodd-Frank disclosure requirements, under which the Fed must
publicly disclose transaction data a year after a facility is terminated or two years after lending ceases, whichever
comes first.
72 See Federal Reserve, “ Factors Affecting Reserve Balances - H.4.1,” https://www.federalreserve.gov/releases/h41/.
73 See Federal Reserve, “ Quarterly Report on Federal Reserve Balance Sheet Developments,”
https://www.federalreserve.gov/monetarypolicy/quarterly-balance-sheet-developments-report.htm.
74 Reports are available at https://home.treasury.gov/policy-issues/international/exchange-stabilization-fund/esf-reports.
75 A list of reports and transaction summaries can be found on T reasury’s website at https://home.treasury.gov/policy-
issues/cares/preserving-jobs-for-american-industry.
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Table 4. Reporting, Disclosure, and Testimonial Requirements in Title IV
Submitted
Section
Requirement
Due Date
By
Submitted To
4026(a)
Online publication of
Within 72 hours
Secretary of
Online publication

information about each
after any covered
the Treasury
transaction under
transaction
§4003(b)(1), (2), or (3).

4026(b)(1)(A)
A summary report about
Within seven days
Secretary of
Chairs and ranking
transactions to passenger
after a covered
the Treasury
members of (1) House
air, cargo air, and national
transaction
Financial Services
security industries.
Committee; (2) House

Ways and Means
Committee; (3) Senate
Banking, Housing, and
Urban Affairs
Committee; and (4)
Senate Finance
Committee
4026(b)(1)(B)
Summary reports about
Within 7 days of
Secretary of
Online publication
and
each loan and loan
reporting to
the Treasury
4026(b)(1)(C)
guarantee made to
Congress and
passenger air, cargo air, and every 30 days
national security industries.
4026(b)(2)(A)(i) Reports with al the
Within 7 days
Federal
(1) House Financial
and
information required by 12
after a covered
Reserve
Services Committee; and
4026(b)(2)(A)(i) U.S.C. §343(3)(C)(i) for
transaction and
(2) Senate Banking,
transactions involving
every 30 days
Housing, and Urban
Federal Reserve.
Affairs Committee
4026(b)(2)(B)
Publication of reports
Within seven days
Federal
Online publication
under §4026(b)(2)(A)(i) or
of reporting to
Reserve
§4026(b)(2)(A)(i ).
Congress
4026(c)
Testimony on assistance
Quarterly
Secretary of
(1) House Financial
program.
the Treasury
Services Committee; and
and Federal
(2) Senate Banking,
Reserve
Housing, and Urban
Chair
Affairs Committee
4026(d)
Guidance and application
No explicit
Secretary of
Online publication
materials for loans and loan
deadline
the Treasury
guarantees to passenger air,
cargo air, and national
security industries.
4026(e)
Publication of relevant
Not more than 24
Secretary of
Online publication
contracts.
hours after
the Treasury
entering into a
covered contract
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Submitted
Section
Requirement
Due Date
By
Submitted To
4026(f)
Comptrol er General
December 27,
Comptrol er
(1) Appropriations
report on economic relief
2020, and annual y
General of
Committees; (2) Budget
program.
thereafter
the United
Committees; (3) House
States
Financial Services
Committee; (4) House
Transportation and
Infrastructure
Committee; (5) Senate
Banking, Housing, and
Urban Affairs
Committee; and (6)
Senate Commerce,
Science, and
Transportation
Committee
4118
Report on air carrier
November 1,
Secretary of
(1) House Energy and
worker support.
2020, and March
the Treasury
Commerce, Science,
27, 2021 (updated
Space, and Technology,
report)
and Transportation and
Infrastructure
Committees; and (2)
Senate Banking, Housing,
and Urban Affairs
Committee
Source: CRS review of Division A of the CARES Act (P.L. 116-136).
Winding Down CARES Act Programs76
As noted above, the Treasury Secretary cannot make any new loans, loan guarantees, or
investments in Fed programs after the end of 2020. Given that the pandemic was ongoing and
worsening at the end of 2020, Members of Congress debated whether this deadline should be
changed, whether Fed programs backed by CARES funds should be extended after the end of the
year, and whether the permitted uses of Title IV funds after 2020 should be modified.
Some Members argued that the Fed programs should not be extended on the grounds that
financial stability has been restored, and if Fed emergency facilities are extended too long, they
may crowd out private credit.77 To that end, these Members also wanted to withdraw CARES
funds pledged to Fed programs that were no longer needed. Other Members supported extending
the programs because they thought it was premature to terminate the Fed’s facilities when the
pandemic was worsening, which could potential y cause economic conditions to deteriorate in
2021.78 Further, they wanted to leave already-pledged funds in place because they did not want to
unduly constrain the next Treasury Secretary’s actions. Section 4027 al ows funding to be used

76 T his section was written by Marc Labonte and Andrew Scott.
77 See, for example, Senate Committee on Banking, Housing, and Urban Affairs, “Crapo Statement at CARES Act
Oversight Hearing,” press release, December 1, 2020, https://www.banking.senate.gov/newsroom/majority/crapo-
statement -at-cares-act-oversight -hearing.
78 See, for example, House Financial Services Committee, “Waters Calls Out Mnuchin for Prematurely Ending
Essential Emergency Lending Programs,” press release, December 2, 2020, https://financialservices.house.gov/news/
documentsingle.aspx?DocumentID=407043.
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after the end of 2020 for loan modifications, restructuring, and other amendments; the exercise of
options, warrants,79 or other investments made in 2020; or administrative costs. If inadequate
funding remained after funding was withdrawn, then these functions could not be carried out.
Further, if the Treasury Secretary and Fed decided to revive these programs in the future, a
reduction in CARES funding could potential y limit the future size and scope of the programs.
Secretary Mnuchin’s Decision to Allow the Fed’s CARES Programs
to Expire
On November 19, 2020, Treasury Secretary Mnuchin wrote a letter to Fed Chairman Powel ,
effectively terminating the Fed’s CARES Act facilities at the end of 202080 and asking the Fed to
return the unused funds to the Treasury.81 In his opinion, by setting a December 31 termination
date on Title IV funding, Congress signaled that it did not wish for these Fed facilities to continue
providing assistance after that date. In this letter, the Treasury Secretary estimated $455 bil ion of
the original $500 bil ion to have been unused. This comprises $429 bil ion in unused funds for
Federal Reserve facilities, as wel as $26 bil ion in unused funds marked for Treasury direct
loans.82 The Secretary contends that the Federal Reserve returning the funds it has received and
does not need would al ow the unused funding to return to the Treasury’s general fund. Congress,
he argues, could then re-appropriate the $455 bil ion for other purposes. However, Section 4027
states that none of the unused funding can be returned to the general fund until 2026.83 On
November 20, Chairman Powel agreed to work with Treasury to return the unneeded funds.84 (As
discussed in the next section, the overal budget deficit would be the same whether or not the
unused funds are returned to the general fund.)
The decision to extend the termination date on the facilities is governed by Section 13(3) of the
Federal Reserve Act, not the CARES Act, and requires only a finding by five Fed governors of
“unusual and exigent circumstances” and Treasury Secretary approval.85 (Non-CARES Act Fed
emergency programs have already been extended into 2021 based on such a finding.) The
CARES Act, by contrast, prevents the Treasury from providing further investments to backstop
these facilities after the end of 2020. However, in practice the Fed would not need any further

79 T he warrants taken were not exercised in 2020.
80 By regulation, the expiration date of Fed facilities cannot be extended without approval by the T reasury Secretary.
Later, the MSLP was extended until January 8 in order to allow loan applications received before December 14 to be
processed.
81 Mnuchin, letter to Powell.
82 CRS calculations based on publicly available data at the time indicate that slightly less than $454 billion was unused
at the time if one includes the pledged direct loan amounts and Fed assistance outstanding under its facilities backed by
the CARES Act.
83 T his apparent contradiction between the law and the Secretary’s stated intentions might be explained by budget
accounting rules under FCRA. T reasury has interpreted FCRA as requiring the subsidies on its loans and investments to
be financed out of the $500 billion appropriated under the CARES Act and the unsubsidized portion of its loans and
investments to be financed through ESF borrowing from the T reasury. When the Fed has returned CARES Act funding
invested in its facilities to the ESF, those loans financing the unsubsidized portion of the investments would be repaid,
and the proceeds would return to the general fund. However, the repayment of those loans would not necessarily affect
the ESF’s access ability to use up to $500 billion from 2021 to 2026 for the purposes in Section 4027. See U.S.
T reasury, Exchange Stabilization Fund Statem ent of Financial Position , October 31, 2020.
84 Federal Reserve Chairman Powell, letter to T reasury Secretary Mnuchin, November 20, 2020,
https://www.federalreserve.gov/foia/files/mnuchin-letter-20201120.pdf.
85 Under law, the programs cannot be permanent, and under regulation, the Fed may extend the programs six months at
a time with T reasury approval.
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CARES investments to reopen the facilities and provide further assistance at a future date because
the facilities had only $41 bil ion in assistance outstanding at the end of 2020.86 Pledged
assistance could be reduced from $195 bil ion to $41 bil ion and there would stil be enough
CARES Act funds to cover losses if the Fed lost 100% of the value of its loans and investments .
Realistical y, the maximum potential loss rate is much smal er than 100%. Original y, the Fed was
wil ing to provide assistance of up to $1.95 tril ion through these four programs with the $195
bil ion backing of the CARES Act, implying a maximum overal potential loss rate of 10%.
P.L. 116-260, discussed in the next section, sustained the Secretary’s decision to al ow these
programs to expire at the end of the year and withdrew the unused funding.
How P.L. 116-260 Changed Title IV of the CARES Act87
Because the Treasury’s ability to make new loans, loan guarantees, and investments under Title
IV expired at the end of 2020 and much of the funding was not used, several proposals to use that
funding for other purposes or change the terms of the funding saw legislative action in the 116th
Congress.88
In December 2020, Congress agreed to another coronavirus relief package, which was signed into
law as part of P.L. 116-260. This package included two titles that modified Title IV of the CARES
Act.
Subtitle A of Title IV of Division N of P.L. 116-260 provides $15 bil ion for payroll support to
passenger air and $1 bil ion to air-related contractors. As noted above, the funding for payroll
support had been virtual y depleted for passenger air and mostly depleted for air-related
contractors by October 2020. Recipients must recal and provide back pay to workers who were
furloughed after previous payroll assistance had been exhausted, face restrictions on furloughs
and pay reductions through the end of March 2021, must meet minimum air service obligations
through the end of 2022, and are subject to many of the terms and conditions found in the
CARES Act.
Section 1003 of Division N of P.L. 116-260 permanently rescinded $429 bil ion of the $500
bil ion, which was provided by Title IV of the CARES Act to cover credit subsidies.89 As of

86 T his amount is expected to modestly increase after the end of the year when loans in process are finalized.
87 T his section was written by Marc Labonte and Andrew Scott.
88 S.Amdt. 2652 to S. 178 would have reduced spending under T itle IV “by an amount equal to the difference between
$454,000,000,000 and the aggregate amount of loans, loan guarantees, and other investments that the Secretary has
made or committed to make” on January 19, 2021. On September 10, 2020, and October 10, 2020, Senate cloture votes
on S.Amdt. 2652 failed. S.Amdt. 2542 to S.Amdt. 2499 to S. 178 stated that “ the Secretary shall prioritize the provision
of credit and liquidity to assist eligible businesses, States and municipalities, even if the Secretary estimates that such
loans, loan guarantees, or investments may incur losses.” S.Amdt. 2542 to S.Amdt. 2499 to S. 178 would have
prohibited the Fed from providing assistance under programs backed by CARES Act funding after January 4, 2021.
S.Amdt. 2499 was withdrawn on September 8, 2020. T he House passed the Heroes Act (H.R. 6800) and the second
Heroes Act (H.R. 925), both of which included provisions that would have required the Fed to create certain new
emergency facilities backed by CARES Act funding.
89 It is unclear why the act rescinds $429 billion when the most recent financial statement showed $480.6 billion
remaining in the balance with T reasury (to finance subsidies) as of October. Alternatively, the outstanding amount of
T reasury loans and investments was $104.5 billion, so $395.5 billion of $500 billion remained as of October—less than
the amount rescinded. However, the Fed and T reasury are negotiating a reduction in T reasury investments, and if they
were to be reduced to outstanding Fed assistance, then about $63 billion would be needed to cover Fed assistance and
T reasury loans, with about $437 billion remaining, as of the end of 2020. Perhaps coincidentally, $429 billion is equal
to the amount that Secretary Mnuchin requested be rescinded from the amount available for Federal Reserve
investments but not the total amount requested. T he act does not rescind money allocated for any specific purpose, such
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October, Treasury had estimated $19.4 bil ion in credit subsidies.90 The $71 bil ion left after the
rescission remains available to cover credit subsidy re-estimates on existing loans and
investments, modify and restructure existing loans and investments, exercise warrants, cover
administrative expenses, and fund the SIG and COC.
Section 1005 prohibits the Federal Reserve from providing any further assistance through its
programs backed by the CARES Act after the end of 2020. As discussed in the last section,
Secretary Mnuchin’s decision to al ow these programs to expire at the end of 2020 also prevented
the Fed from providing future assistance, but since this decision was made at the Secretary’s
discretion, the new Treasury Secretary had the option to reverse it. The section also limits the
Fed’s ability to modify those programs in the future, including by real ocating CARES funding to
new Fed programs. Final y, the section prohibits the Treasury Secretary from using the non-
CARES Act assets of the ESF to backstop a re-established MSLP, MLF, and both corporate credit
facilities. The Secretary may use those assets to backstop other Fed facilities, however, including
the TALF.91
It was never made explicit why some Fed programs were backed by CARES Act funding and
others were backed by the preexisting assets of the ESF when al of the programs were announced
around the same time. But if Congress removes CARES Act funding from these programs, it
follows that the Secretary cannot replace it with funds raised from the ESF’s non-CARES Act
assets.
Rescinding most of the Title IV funding was not necessary to prevent the Treasury Secretary from
making new loans and investments in Fed programs in the future, because the Secretary’s
authority to do so expired at the end of 2020 under the CARES Act. Nevertheless, rescinding this
funding could have at least two rationales.
First, reducing Treasury’s investments in Fed programs below the amount that the Secretary had
original y pledged to those programs ($195 bil ion) limits the potential growth of those programs
if they were revived in the future for the reasons discussed in the previous section. (However,
Section 1005 also prohibited the revival of those programs.)
Second, policymakers frequently argued that unused Title IV funding should be real ocated to
other uses. It is true that the cost of the CARES Act was lower than expected because most Title
IV funds were unused. However, the cost to the government of enacting new spending or revenue
measures equal to the unused Title IV funds is the same whether or not the Title IV funds are
rescinded. Because of CBO scoring conventions, a rescission of Title IV funds has not been
scored as significantly reducing the budget deficit. In its score of S.Amdt. 2652, CBO estimated
that the reduction in Title IV funding would have no effect on outlays or the budget deficit.92 In
fact, reusing those funds for additional spending or tax reductions would increase the recorded
budget deficit because only the subsidy portion of Title IV loans and investments are recorded as
spending. In its cost estimate of the CARES Act, CBO estimated that the $500 bil ion authorized
in Title IV would increase the budget deficit by $1 bil ion, which was CBO’s estimate of the
subsidy amount, since loans and investments are eventual y mostly repaid with interest. It follows
that reducing this authority would also have a negligible effect on the deficit. In plain English,

as Federal Reserve investments.
90 U.S. T reasury, Exchange Stabilization Fund Statement of Financial Position , October 31, 2020.
91 T he act may have permitted T ALF to be revived in the future because it was the only program backed by CARES
Act funding that was initially created in the 2007 -2009 financial crisis. T he act states that it does not modify or limit the
Fed’s authority before enactment of the CARES Act.
92 CBO, “Estimate for Senate Amendment 2652 to S. 178, the Delivering Immediate Relief to America’s Families,
Schools and Small Businesses Act,” October 21, 2020, https://www.cbo.gov/system/files/2020-10/sa2652.pdf.pdf.
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money that was never going to be spent—because it had stil not been spent shortly before the
authority to spend had it expired—cannot generate savings by being taken back. Therefore, it
would not serve as an offset that would reduce the overal size of a new stimulus package from a
scoring perspective and would not help offset a new package’s effect on the federal debt or
deficit.
Preliminary Lessons Learned
Size
The amount of assistance Treasury pledged under Title IV (almost $22 bil ion in loans to industry
and $195 bil ion to Fed programs) turned out to be significantly less than the $500 bil ion that
was authorized. It also turned out to be more than was needed because the Fed provided only $41
bil ion to recipients in programs backed by the $195 bil ion, which wil be used only if those
programs experience losses. As a result, only a fraction of the Title IV funds pledged were
needed, and P.L. 116-260 rescinded al but $71 bil ion of the funds.
There are at least two possible explanations for the lack of uptake. First, financial conditions,
which were highly unstable early in the pandemic, normalized shortly after the CARES Act was
enacted and these Fed programs were announced. Programs that might have been highly
subscribed if financial instability persisted were less needed or desired once financial conditions
normalized. Second, the terms and conditions of the Fed’s programs were not as attractive as
comparable sources of private credit, despite repeated modifications by the Fed to make them
more attractive. These explanations are not mutual y exclusive, because those private sources of
credit might not have been available (at least on similar terms) if financial conditions had not
normalized.
Cost
The final cost to the government of Title IV assistance wil not be known until loans are repaid
and securities mature, which wil take years. At this point, it is certain to be much lower than
$500 bil ion, because Treasury loans and Fed assistance equaled a combined $62 bil ion at the
end of 2020. It wil also be much lower than $62 bil ion, because most if not al of that amount
wil be repaid with interest, with the exception of the (separate) $28 bil ion for airline payroll
support provided as of the end of 2020. Stil , Treasury currently estimates that the assistance was
subsidized, meaning that the $500 bil ion wil not be fully recouped in present discounted value
terms.93
Speed
One policy goal was to make this assistance available quickly to help stabilize an economy that
was rapidly deteriorating. The practical limitations of setting up new and complex programs from

93 T reasury measures a loan to be subsidized when the present discounted value of repayments is projected to be less
than the present discounted value of the principal t hat was extended. A subsidy could occur because the full amount of
the loan is not repaid, because the interest payments and other compensation received are lower than T reasury’s
borrowing costs, or both. Some argue that T reasury’s estimation method understates the true economic subsidy of its
loans because it does not take into account any difference in terms from what a company would have been able to
secure from a private lender. (Present discounted value reduces the value of future amounts compared to p resent
amounts to adjust for the time value of money.)
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scratch worked against accomplishing this goal. In addition, because of capacity constraints,
Treasury chose to prioritize the implementation of several of the other urgent CARES Act
programs. Similarly, the Fed had several other emergency programs not backed by the CARES
Act that it rolled out first. In many cases, the overal economy was recovering by the time
CARES Act assistance was received. The first direct Treasury loan was not made until July 2020,
and the remaining loans were made between September 25, 2020, and November 13, 2020.
Likewise, the Fed programs were fully operational between May 12, 2020, and September 4,
2020.94
Loans to Industry
Congress chose to make these loans available to only three industries, in contrast to the PPP, for
example, which was available to al business affected by the pandemic if criteria such as eligible
smal business were met. At the time of enactment early in the pandemic, some viewed these
industries as uniquely affected by the pandemic.95 In hindsight, several other industries where
social distancing is impractical were also severely affected by the pandemic and were unable to
obtain funding through Treasury direct loans or worker assistance grants. For example, hotels and
restaurants were not eligible for Title IV funding.
For two industries, passenger and cargo air, Congress was specific about which businesses would
qualify. For the other industry, businesses critical to national security, Congress left it to the
Treasury Secretary’s discretion to determine which businesses qualify. As a result, the businesses
that were granted loans (e.g., a trucking company) differed greatly from the businesses that
Congress reportedly intended to receive loans (e.g., major airline manufacturers).96 The latter
group reportedly chose not to apply for loans because they could get better terms from private
creditors once financial conditions had stabilized.97
Terms and Conditions
The CARES Act required conditions such as restrictions on executive compensation, warrants,
and restrictions on share buybacks and dividends that may have been attractive only to borrowers
who had no private sector alternative available to them. Whereas Congress may have envisioned
that the program would serve financial y healthy borrowers facing a frozen private credit market,
those borrowers could instead borrow in relatively normal y functioning credit markets,
particularly if they could borrow in bond markets.98 That potential y left a program that was

94 GAO, Federal Reserve Lending Programs: Use of CARES Act -Supported Programs Has Been Limited and Flow of
Credit Has Generally Improved, GAO-21-180, December 10, 2020, https://www.gao.gov/assets/720/711141.pdf.
95 See, for example, David Gelles and Niraj Chokshi, “‘Almost Without Precedent’: Airlines Hit Hard by Coronavirus,”
New York Tim es, March 5, 2020, https://www.nytimes.com/2020/03/05/business/coronavirus-airline-industry.html.
96 Reportedly, one intended recipient at the time of enactment was the aerospace manuf acturer Boeing. When asked
about the use of this funding, the T reasury Secretary was reportedly quoted as saying, “ Right now, Boeing is saying
they don't need it.” Quoted in Andrew T angel and Doug Cameron, “ Bailout Aids Boeing Even If It Doesn’t T ap
Funds,” Wall Street Journal, March 28, 2020. Senator Pat T oomey was reportedly quoted as saying the $17 billion “ is
not meant to be exclusively for Boeing.” Quoted in Gregory Wallace and Phil Mattingly, “ Boeing Could Receive
Billions from Stimulus Package,” CNN, March 26, 2020. Senator Maria Cantwell reportedly said that the $17 billion
was likely to be used for aerospace manufacturers, including Boeing, and their supply chain. See Dominic Gates,
“Cantwell: Boeing May Reject Strings Attached,” Seattle Times, March 26, 2020.
97 Leslie Jones, “Boeing Raises Monster $25 Billion in Bond Offering, Rules Out Federal Aid,” CNBC, April 30, 2020,
https://www.cnbc.com/2020/04/30/boeing-raises-monster-25-billion-in-bond-offering-rules-out -federal-aid.html.
98 See, for example, Joe Rennison, “U.S. Corporate Bond Issuance Hits $1.919tn in 2020, Beating Full-Year Record,”
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

primarily attractive to financial y unhealthy borrowers that could not secure private credit even in
normal y functioning markets, which increases the risk that the program wil experience future
losses or wil have kept inefficient producers in the marketplace.
Preserving Jobs
Preserving jobs was one major goal of Title IV, but only the direct loans and one Fed program had
employee retention conditions. In the case of the Fed program, the condition was not binding—
borrowers needed only to “make commercial y reasonable efforts to maintain its payroll and
retain its employees during the time the Eligible Loan is outstanding,”99 and according to the
COC, the Fed is not monitoring whether borrowers retain payroll.100 Further, several of the loans
had, at most, a minimal impact on overal industry employment. For example, eight of the
borrowers employed fewer than 100 employees overal .
Role of Federal Reserve
The Fed’s CARES Act programs assisted municipalities, nonfinancial businesses, and corporate
bond markets, expanding the Fed’s traditional role beyond lender of last resort to the banking
system and even beyond the more expansive role it took in the 2007-2009 financial crisis. The
economic disruptions caused by the public health crisis were unique and arguably cal ed for an
unprecedented policy response. But once financial conditions stabilized, policymakers faced two
questions: First, how could Congress ensure that the Fed’s new role did not become permanent or
routine? Second, how quickly should the Fed’s new role be removed—once financial conditions
had stabilized or once the pandemic had ended? And what if a new bout of financial instability
emerged?
In the CARES Act, Congress limited the availability of Title IV loans and investments to the end
of 2020. (Notably, the expiration in Title IV funding did not require the Fed programs backed by
that assistance to expire at the same time.) When this decision was made in March, few
policymakers arguably expected that the pandemic would be worse when the assistance expired
than it had been when it was enacted. On the other hand, financial conditions stabilized shortly
after enactment of the CARES Act and have remained stable since. In the December coronavirus
package (P.L. 116-260), Congress decided to maintain the year-end expiration date and
permanently close down al but one of the Fed programs backed by CARES funding. In effect,
those programs may be revived only by a future act of Congress and not at the Fed and Treasury
Secretary’s discretion. The changes in P.L. 116-260 may help avoid the potential for an
inappropriate expansion of the Fed’s role after the pandemic is over at the expense of limiting the
Fed’s ability to respond to any new crisis before or after the pandemic has ended.

Financial Tim es, September 2, 2020, https://www.ft.com/content/a59c2a9d-5e0b-4cbc-b69e-a138de76a776.
99 See, for example, Federal Reserve, Main Street New Loan Facility Term Sheet, December 29, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20201229a1.pdf.
100 As reported in Congressional Oversight Commission, The Third Report of the Congressional Oversight
Com m ission, July 20, 2020, p. 14, https://www.toomey.senate.gov/files/documents/Oversight%20Commission%20-
%203rd%20Report%20(FINAL)_7.20.20.pdf.
Congressional Research Service
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Treasury and Federal Reserve Financial Assistance in Title IV of the CARES Act

Author Information

Andrew P. Scott, Coordinator
Rachel Y. Tang
Analyst in Financial Economics
Analyst in Transportation and Industry

Marc Labonte
Ben Wilhelm
Specialist in Macroeconomic Policy
Analyst in Government Organization and

Management

Acknowledgments
William Egar, formerly of CRS, was originally a co-author of this report.

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
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copy or otherwise use copyrighted material.

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R46329 · VERSION 5 · UPDATED
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