Banking and Finance Law Daily Inspector General for Pandemic Recovery reports to Congress
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Thursday, August 6, 2020

Inspector General for Pandemic Recovery reports to Congress

By Nicole D. Prysby, J.D.

The Office of the Special Inspector General for Pandemic Recovery released an initial report to Congress with updates on its activities and recommendations.

The Office of the Special Inspector General for Pandemic Recovery (SIGPR) has transmitted an initial report to Congress highlighting the work SIGPR has done since the confirmation of the Inspector General, Brian Miller, on June 2, 2020. SIGPR was established to supervise loans and other investments made by the Secretary of the Treasury under any program established under Division A of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Aug. 3, 2020, report explains that SIGPR has been working to build staff and infrastructure. It also sets forth a summary of obligations made to date by the Department of the Treasury for direct loans and other lending programs and facilities, and it provides recommendations for improving SIGPR’s future operations.

SIGPR was established by Section 4018 of the CARES Act. Under the CARES Act, SIGPR has the duty to conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments by the Secretary of the Treasury under any program established or managed by the Treasury Secretary under Division A of the CARES Act. The CARES Act requires this initial report to Congress within 60 days of the Special Inspector General’s confirmation, and then quarterly reports thereafter.

The report explains that SIGPR has worked in the first 60 days to build its staff and infrastructure and to begin providing effective oversight within its areas of core statutory jurisdiction. Since IG Miller’s confirmation, SIGPR has located temporary and long-term office space, hired a senior leadership team, held briefings, attended meetings, and joined working groups across several agencies. SIGPR’s Hotline is operational, and a website is under development. SIGPR has initiated 12 investigations and has reviewed well over 10,000 pages of requested documents.

SIGPR reports must include detailed information about the Treasury’s loan programs and investments under CARES Act Section 4003, data regarding which entities have received those loans and investments, the current status of those transactions, and other information. This initial report provides data on the following programs and obligation amounts:

  • Direct Loans to Passenger Air Carriers and Related Businesses ($0 obligated); no loan agreements have been executed, but letters of intent have been signed with 10 airlines.
  • Direct Loans to Cargo Air Carriers ($0 obligated).
  • Direct Loans to Businesses Critical to Maintaining National Security ($700 million obligated); a loan was provided to YRC Worldwide, Inc. on July 8, 2020.
  • Main Street Lending Program (MS Facilities, LLC) ($75 billion obligated).
  • Term Asset-Backed Securities Facility (TALF II, LLC) ($10 billion obligated); Primary Market Corporate Credit Facility (Corporate Credit Facilities, LLC) ($50 billion obligated); and Secondary Market Corporate Credit Facility (Corporate Credit Facilities, LLC) ($25 billion obligated). Detailed information for these facilities is available on the Federal Reserve’s website.
  • Municipal Liquidity Facility (Municipal Liquidity Facility, LLC) ($35 billion obligated). As of July 10, 2020, the Federal Reserve reported only one transaction—a $1.2 billion note from the State of Illinois.

The report sets forth three recommendations. First, that, in future loan agreements, the Department of the Treasury expressly include SIGPR in the list of entities entitled to "timely and unrestricted access" to information from the borrower. The Treasury Department agreed to implement the change in future agreements. Second, SIGPR recommends that Congress take up the Special Inspector General for Pandemic Recovery Expedited Hiring Authorities Act of 2020 (S. 3751). Finally, SIGPR recommends that Congress consider the various CARES Act relief programs, how they overlap, whether the overlap is in the public interest, and whether legislative clarification is warranted.

Companies: YRC Worldwide, Inc.

MainStory: TopStory Covid19 FederalReserveSystem FinancialStability Loans OversightInvestigations SecuritiesDerivatives

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