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SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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Quarterly Report to the United States
Congress
September 30, 2020
Office of the Special Inspector General for
Pandemic Recovery
CONTENTS
INTRODUCTORY MESSAGE
1
EXECUTIVE SUMMARY
5
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY 9
Statutory Authority
10
SIGPR in Context: Jurisdictional Updates
10
SIGPR in Context: Reporting Requirements
21
SIGPR in Context: CARES Act Program Eligibility & Oversight
25
SIGPR Mission and Core Values
37
MANAGEMENT AND ADMINISTRATION
38
Building Momentum: Budgetary Updates
39
Building Momentum: IT Updates
39
SIGPR OFFICES AND ACTIVITIES
41
SIGPR Offices
42
Building Partnerships
45
SIGPR FINDINGS AND REPORTABLE DEVELOPMENTS
47
Direct Loans
48
Other Investments Under Section 4003
52
RECOMMENDATIONS
62
Recommendations to Congress
63
APPENDICES
64
APPENDIX A
65
APPENDIX B
69
APPENDIX C
77
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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INTRODUCTORY MESSAGE
INTRODUCTORY MESSAGE
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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An Introductory Message from Inspector General Brian D. Miller
Our Nation’s economic health and recovery require that CARES Act funds are available to those
who need them the most. This is no small task. Unlike past stimulus legislation, the CARES Act
creates a complex network of programs, each involving different agencies targeting different
sectors of society with different types of funding. And while the Small Business Administration’s
Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) receive the lion’s
share of publicity, those programs represent only a fraction of the funding and programming
put in place by the CARES Act.
Take, for example, the $500 billion made available to the Secretary of the Treasury for direct
loans to critical industries and investments in facilities established by the Federal Reserve. The
Secretary’s investments in the facilities alone could result in up to $2.3 trillion in financing.1 Or
take the Payroll Support Program, which authorizes the Secretary to provide up to $32 billion in
funding to preserve jobs in the aviation industry. Or take the Coronavirus Relief Fund, which
authorizes the Secretary to provide another $150 billion in direct funding to states,
municipalities, and Tribal governments. The Special Inspector General for Pandemic Recovery
(SIGPR) oversees all these programs.
To do our part in protecting taxpayers’ hard-earned dollars, our office has begun building
critical relationships that will help us identify areas of risk while leveraging existing institutional
knowledge and infrastructure. For example, overseeing the Secretary’s investments into
Federal Reserve facilities—and ensuring those facilities are not defrauded—requires close
coordination between SIGPR and the Federal Reserve Inspector General (Fed IG). Critically,
while SIGPR and the Fed IG each have discrete institutional interests,2 we share the same goal:
to protect taxpayer dollars and ensure CARES Act funds reach the individuals and entities they
are intended to help.
With that goal in mind, the Fed IG, Mark Bialek, and I have developed an active and effective
partnership, and our staffs now meet (virtually) and talk regularly, too. I want to thank IG Bialek
and his staff for their crucial support and expertise.
I also want to thank my fellow Treasury IGs for their strong support and assistance. Russell
George, Treasury Inspector General for Tax Administration, has provided invaluable advice to
our office as we continue to get up and running. Likewise, Christy Romero, Special IG for the
Troubled Asset Relief Program, has helped in many ways—her team recently provided SIGPR
with a copy of its Case Management System software and has offered ongoing subject matter
1 Press Release, Treasury and Federal Reserve Board Announce New and Expanded Lending Programs to
Provide up to $2.3 Trillion in Financing, U.S. Dep’t Treasury (Apr. 9, 2020),
https://home.treasury.gov/news/press-releases/sm968.
2 This reflects that the Federal Reserve and the Treasury have different institutional interests. For
example, any losses incurred by Treasury-backed Section 13(3) facilities would be borne first not by the
Federal Reserve, but by the Department of the Treasury, which holds a “first loss” position.
INTRODUCTORY MESSAGE
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expertise during CMS project planning and implementation. Lastly, Rich Delmar, acting IG at
Treasury, has kindly offered our office help on several fronts as well. I am dedicated to
establishing regular lines of communication with these parties to ensure we operate efficiently
within the Department of the Treasury. Importantly, many other Inspectors General have also
assisted our office as we continue to look for opportunities to partner on identifying and
combatting fraud, waste, and abuse.
We continue to work closely with FinCEN, one of our office’s first strategic partners. I want to
thank the Director of FinCEN, Ken Blanco, and his team for their help and a very productive
collaboration. We anticipate an even more productive relationship moving forward. Finally, I
must thank the U.S. Patent and Trademark Office, which, by providing office space, has been
instrumental in enabling our office to begin its work.
Thank you to those who read SIGPR’s initial report3 and sent comments. Positive feedback
included praise for how we situated SIGPR’s role and jurisdiction within the overall oversight
landscape of the CARES Act. We heard from many individuals who found our comprehensive
matrix and supporting legal analysis helpful. While others were less encouraging, their feedback
helpfully confirms that SIGPR is correct to flag legal ambiguities in the statute.
SIGPR continues to work closely with our Department of Justice (DOJ) and U.S. Attorney
partners. Frequent teleconferences with senior officials have cemented our partnerships and
allowed us to explore how we might be most effective. Recently, my senior staff and I had the
opportunity to meet in person with United States Attorneys and others from DOJ at the annual
conference for United States Attorneys, held this year in Alexandria, Virginia. At the conference,
I spoke to the White-Collar Crime Subcommittee and had the unique opportunity to brainstorm
innovative solutions with key United States Attorneys in a separate meeting.
I am very excited to formally announce the newest addition to our team: Tracy Doherty-
McCormick. Now serving as our General Counsel, Tracy joins us from her position as First
Assistant United States Attorney for the Eastern District of Virginia, where she also served as
Acting United States Attorney. I am deeply honored that Tracy and so many other exceptional
public servants have joined SIGPR.
I am ever mindful of the importance of the work of the Office of the Special Inspector General
for Pandemic Recovery in our Nation’s history and for our Nation’s economic health and
recovery. Trillions of taxpayer dollars are being disbursed to address our economic crisis, and
SIGPR is a key part of making sure those dollars are well spent. Every dollar wasted or lost to
fraud is a dollar that a deserving American needs.
3 Special Inspector General for Pandemic Recover, Initial Report to Congress (Initial Report) (Aug. 3,
2020), https://www.sigpr.gov/sites/sigpr/files/2020-09/SIGPR-Initial-Report-to-Congress-August-3-
2020_0.pdf.
INTRODUCTORY MESSAGE
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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With these concerns in mind, I provide the first quarterly report pursuant to Section
4018(f)(1)(A) of Public Law 116-136 (15 U.S.C. § 9053(f)(1)(A)).4
Brian D. Miller
September 30, 2020
4 A great deal of lending activity occurred in the closing days of this calendar quarter. In order to fully
capture and report on all activity within future calendar quarters, and consistent with the practice of
other offices of inspectors general, SIGPR will be submitting its future quarterly reports no later than 30
days after the end of each calendar quarter.
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
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The Special Inspector General for Pandemic
Recovery (SIGPR) was established by
Section 4018 of the Coronavirus Aid, Relief,
and Economic Security Act (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 made by
the Secretary of the Treasury under any
program established by the Secretary under
Division A of the CARES Act, as well as the
management by the Secretary of any
program established under Division A of the
CARES Act.
By express incorporation, SIGPR also has
the duties, responsibilities, powers, and
authorities granted inspectors general
under the Inspector General Act of 1978,
including broad subpoena authority.
Nine days after the CARES Act was signed
into law, the President nominated Brian D.
Miller to be Special Inspector General. Two
months later, on June 2, 2020, IG Miller was
confirmed. IG Miller immediately began the
process of hiring a seasoned and well-
respected senior leadership team, and on
August 3, 2020, SIGPR submitted its initial
report to Congress.5
In the short time since SIGPR submitted its
initial report, the office has continued to
analyze its statutory jurisdiction, delve into
the programs it oversees, build partnerships
with other inspectors general and law-
enforcement agencies, and develop an
organizational plan for conducting audits
and investigations.
5 Initial Report, supra note 3.
CARES ACT OVERSIGHT
In its initial report, SIGPR offered its best,
objective understanding of the jurisdictional
contours for each of the entities assigned a
major oversight role by the CARES Act and
invited Congress to clarify potential
ambiguities. As for itself, SIGPR concluded it
has jurisdiction over Division A loans, loan
guarantees, and other investments made by
the Secretary of the Treasury, and Division
A programs managed by the Secretary.
SIGPR concluded it does not have
jurisdiction over any programs in Division B.
Here, SIGPR takes the next logical step by
applying its previous analysis to determine
which Division A programs satisfy SIGPR’s
jurisdictional requirements. Doing so, SIGPR
concludes four Division A programs clearly
fall within its core jurisdiction:
1. Loans, loan guarantees, and other
investments by the Secretary of the
Treasury under Division A, Title IV,
Subtitle A, section 4003;
2. The Payroll Support Program under
Division A, Title IV, Subtitle B;
3. The Coronavirus Relief Program
under Division A, Title V; and
4. Loans by the Secretary to the
United States Postal Service under
Division A, Title VI.
It remains unclear whether SIGPR has
jurisdiction over the Paycheck Protection
Program (PPP), but SIGPR offers what it
believes to be the factors that weigh in
favor of and against such jurisdiction. Again,
SIGPR invites Congress to clarify lingering
ambiguities or incorrect legal conclusions.
EXECUTIVE SUMMARY
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SIGPR also provides in this report a new
oversight matrix. This matrix summarizes
the basic eligibility requirements and use
restrictions for the major programs under
Division A of the CARES Act. The matrix
reflects SIGPR’s view that each condition
attached to a CARES Act dollar—and
especially certifications related to those
conditions—presents an opportunity for
fraud.
HIGHLIGHTS
Over the past eight weeks, SIGPR has
worked diligently to better understand the
programs within its core jurisdiction, build
strategic partnerships with interested
parties, and develop an organizational plan
for identifying fraud, waste, and abuse.
To better understand how the relevant
programs function, SIGPR has, among other
things, received briefings from the Federal
Reserve Bank of Boston, reviewed
documents produced by the Department of
the Treasury, and participated in a host of
informative discussions with senior
management and special agents at the
Federal Reserve and Treasury Offices of
Inspector General. This approach reflects a
larger reality: Effective oversight of the
trillions of dollars flowing through CARES
Act-funded programs hinges on
transparency and cooperation not only as
between agencies and their respective
inspectors general, but also as between
inspectors general themselves.
Elsewhere on the partnership front, SIGPR
now has a formal memorandum of
understanding with the Financial Crimes
Enforcement Network and six U.S.
Attorney’s Offices, with more to come.
SIGPR is also working closely with senior
66 Treasury recently announced that it has concluded loans under CARES Act § 4003 with seven air carriers. Press
leadership in the front offices of the
Department of Justice and the U.S.
Securities and Exchange Commission.
Notably, SIGPR officially launched its
website this quarter, which can be found at
www.sigpr.gov. The website includes
information on whistleblower protections
and how to report fraud, waste, and abuse.
Individuals may also reach SIGPR’s
telephonic Hotline at 202-927-7899.
Leveraging these tools and relationships,
SIGPR’s Office of Investigations has initiated
a total of 21 preliminary investigations into
allegations of improper activity. Of those,
SIGPR has referred seven to other IGs with
proper jurisdiction. SIGPR is currently
working one investigation jointly with a
partner United States Attorney’s office. And
as SIGPR continues to build out its
operational infrastructure, it will take a
data-driven approach to generating and
referring future investigative leads.
In sum, SIGPR’s strategic partnerships and
law-enforcement mindset continue to bear
fruit.
REPORTABLE FINDINGS
SIGPR’s quarterly reports to Congress
include detailed information about
Treasury’s loans and investments under
CARES Act Section 4003, data regarding the
entities that have received such loans and
investments, the financial status of those
transactions, and other information. The
information SIGPR has obtained in this
regard is discussed more fully throughout
this report, but an overview of the relevant
categories and amounts of obligations by
Treasury to date is reflected in the following
table6:
EXECUTIVE SUMMARY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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Funding Program
Obligation
Amount
Direct Loans to
Passenger Air
Carriers and Related
Businesses
$5,897,000000
Direct Loans to
Cargo Air Carriers
$0
Direct Loans to
Businesses Critical
to Maintaining
National Security
$700,000,000
Main Street Lending
Program (MS
Facilities, LLC)
$37,506,756,581
Term Asset-Backed
Securities Facility
(TALF II, LLC)
$10,000,000,000
Primary and
Secondary Market
Corporate Credit
Facility (Corporate
Credit Facilities, LLC)
$37,508,197,253
Municipal Liquidity
Facility (Municipal
Liquidity Facility,
LLC)
$17,500,000,000
RECOMMENDATIONS
Finally, SIGPR provides two congressional
recommendations in this report. First,
SIGPR recommends that Congress amend
the CARES Act, or otherwise agree, to allow
SIGPR to submit its quarterly reports to
Congress no later than 30 days after the
end of a calendar quarter. This would
accord with the practice of other inspectors
general that produce statutorily required
reports. Second, SIGPR again recommends
that Congress take up S.3751, the Special
Inspector General for Pandemic Recovery
Expedited Hiring Authorities Act of 2020,
sponsored by Senator Grassley. The hiring
flexibility offered by this bill would greatly
improve SIGPR’s ability to fulfill its mission.
Release, Treasury Concludes Loans to Seven Major Airlines, Supports Additional Relief for Aviation Industry
Workers, U.S. Dep’t Treasury (Sept. 29, 2020), https://home.treasury.gov/news/press-releases/sm1140. The data
reported in the table here incorporates the known loan amounts to American Airlines, Inc., and Hawaiian Airlines,
Inc., but SIGPR does not yet have data on the loans to the remaining five air carriers.
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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OFFICE OF THE SPECIAL
INSPECTOR GENERAL FOR
PANDEMIC RECOVERY
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
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Statutory Authority
SIGPR was created by Section 4018 of the CARES Act to serve as one of a host of entities
charged with CARES Act oversight.7 Specifically, 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 made by the Secretary of the Treasury under any
program established by the Secretary under Division A of the CARES Act, as well as the duty to
conduct, supervise, and coordinate audits and investigations of the management by the
Secretary of any program established under Division A of the CARES Act.
The CARES Act provides that “the Special Inspector General shall have the authorities provided
in section 6 of the Inspector General Act of 1978.”8 Through this express incorporation of the
Inspector General Act, the CARES Act grants SIGPR broad subpoena authority.9
SIGPR in Context: Jurisdictional Updates
Section 4018 of the CARES Act, which falls under Division A, Title IV, Subtitle A, provides:
It shall be the duty of the Special Inspector General to . . . conduct,
supervise, and coordinate audits and investigations of the making,
purchase, management, and sale of loans, loan guarantees, and
other investments made by the Secretary of the Treasury under any
program established by the Secretary under this Act, and the
management by the Secretary of any program established under
this Act . . . .10
In its initial report to Congress, SIGPR interpreted this and other jurisdictional statements to
situate itself within the broader oversight architecture of the CARES Act. SIGPR offered “its
best, objective understanding of the jurisdictional contours” of the CARES Act to open a dialog
about complex provisions with ambiguous language.11 Among other goals, SIGPR intended its
non-binding analysis “to inform the American taxpayers[] and to provide Congress an
opportunity to clarify ambiguities.”12 SIGPR heard from many individuals that the
comprehensive matrix and supporting legal analysis were helpful. Other feedback was less
enthusiastic but helpfully served to confirm that SIGPR is correct to flag certain legal
ambiguities.
7 The text of Section 4018 of the CARES Act is provided at Appendix A.
8 CARES Act § 4018(d)(1).
9 See 5a U.S.C. § 6(a)(4).
10 CARES Act § 4018(c)(1).
11 Initial Report, supra note 3, at 5.
12 Id. at 10.
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The primary takeaway from SIGPR’s initial report, however, is that SIGPR’s two prongs of
jurisdiction cover:
1. the making, purchase, management, and sale of loans, loan guarantees, and other
investments made by the Secretary of the Treasury under any program established by
the Secretary under Division A; and
2. the management by the Secretary of any program established under Division A.
Applying that framework here, SIGPR concludes that the direct-loans and investments under
Title IV, Subtitle A; the Payroll Support Program under Title IV, Subtitle B; the Coronavirus Relief
Fund under Title V; and loans to the United States Postal Service under Title VI all fall within
SIGPR’s core jurisdiction. SIGPR continues to work through its potential jurisdiction over the
Paycheck Protection Program.
SIGPR’s Core Jurisdiction
Title IV, Subtitle A—Loans and Investments. Subtitle A of Title IV allocates $500 billion to the
Secretary of the Treasury for direct loans to the airline and national-security industries and for
investments into liquidity facilities established by the Federal Reserve. The Secretary’s
investments into the Federal Reserve’s facilities could result in up to $2.3 trillion in financing.13
Paragraphs 4003(b)(1)–(3) authorize the Secretary to provide loans and loan guarantees to
passenger air carriers, cargo air carriers, and businesses critical to maintaining national security.
SIGPR has jurisdiction over these funding programs by virtue of both prongs of its jurisdiction.
At the threshold, the 4003(b)(1)–(3) programs involve the making and management of loans
and loan guarantees. Next, the loans and loan guarantees, by statute, are “made by the
Secretary.” They are also made by the Secretary under a “program established by the
Secretary.” That is to say, the Secretary of the Treasury, and not any other individual or entity,
establishes the system and processes to be used for soliciting, receiving, and processing
applications, as well as the processes for executing and servicing any loans or loan guarantees
awarded. Further, the Secretary establishes these programs under Division A of the CARES Act.
Thus, all elements of the first prong of SIGPR’s jurisdiction are satisfied. Separately, because the
programs are established under Division A, SIGPR also has jurisdiction over the loan programs
under the second prong of its jurisdiction, which covers “the management by the Secretary of
any program established under” Division A.
Paragraph 4003(b)(4) authorizes the Secretary “to make loans and loan guarantees to, and
other investments in,” programs and facilities established by the Federal Reserve to provide
emergency liquidity to specific financial markets and industries. The facilities established by the
Federal Reserve for this purpose are established under Section 13(3) of the Federal Reserve Act.
13 Press Release, Treasury and Federal Reserve Board Announce New and Expanded Lending Programs to Provide
up to $2.3 Trillion in Financing, U.S. Dep’t Treasury (Apr. 9, 2020), https://home.treasury.gov/news/press-
releases/sm968.
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As it relates to SIGPR’s jurisdiction, two facts are worth noting: (1) the Secretary has invested in
special purpose vehicles (SPVs) associated with some, but not all, of the Federal Reserve’s
Section 13(3) facilities,14 and (2) the Federal Reserve, not the Secretary, manages the facilities.
Given that the facilities are managed by the Federal Reserve, the question arises whether SIGPR
has jurisdiction over only the Secretary’s investments into the facilities, or also over the facility-
level transactions. This question is important because SIGPR’s ability to identify fraud and other
illicit activity by private parties would be strengthened by its ability to exercise jurisdiction over
facility-level transactions.
SIGPR’s jurisdiction over the Secretary’s investments into the facilities is clear. These are “loans,
loan guarantees, or other investments”; they are “made by the Secretary”; and they are made
under a “program established by the Secretary under” Division A of the CARES Act. Notably,
Congress did not define the term “program,” as used in this jurisdictional element. But it is
evident the Secretary has established a “program” of investing into select facilities.
The word “program” is defined as “a plan or system under which action may be taken toward a
goal.”15 The “plan or system” in this case is the Secretary’s formal processes for determining
which Section 13(3) facilities to approve for creation, the facilities in which to invest, when to
invest, how much to invest, and on what terms the investments will be made.16 The terms of
investment in particular involve detailed and systematic planning between Treasury and the
Federal Reserve, resulting in an Investment Memorandum of Understanding and Limited
Liability Company Agreement for each facility the Secretary pledges to support. These
documents cover issues like the legal structure and management of the facilities and facility
funds, interest accrual, securities redemptions, and the Secretary’s reservation of rights.17 This
all reflects that the Secretary’s investment of CARES Act funds into select Section 13(3) facilities,
as every American taxpayer should hope, occurs by way of a regimented “plan or system under
which action [is] taken toward a goal”—in a word, a “program.”18 And that “program” is
established by the Secretary under Division A—specifically, paragraph 4003(b)(4).
This then leaves the question whether SIGPR has jurisdiction over the transactions of the
Section 13(3) facilities in which the Secretary invests. SIGPR believes it does. Since subsection
4018(c) gives SIGPR jurisdiction over the “management . . . of . . . investments made by the
Secretary,”19 SIGPR has jurisdiction over the Federal Reserve’s management of the SPVs in
14 SIGPR may refer to the Secretary “investing in” certain Section 13(3) facilities but understands this technically
involves the Secretary investing in a special purpose vehicle created to carry out the facility’s transactions.
15 Program, Merriam-Webster.com (2020), https://www.merriam-webster.com/dictionary/program.
16 See, e.g., Press Release, Treasury and Federal Reserve Board Announce New and Expanded Lending Programs to
Provide up to $2.3 Trillion in Financing, U.S. Department of the Treasury (Apr. 9, 2020),
https://home.treasury.gov/news/press-releases/sm968.
17 See, e.g., Municipal Liquidity Facility, Federal Reserve Bank of New York (last visited Sept. 25, 2020),
https://www.newyorkfed.org/markets/municipal-liquidity-facility.
18 Program, supra note 15.
19 CARES Act § 4018(c)(1).
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which Treasury has invested. In other words, when a Federal Reserve Bank manages an SPV—
including by conducting particular transactions—into which the Secretary has invested, the
Bank is managing the Secretary’s investment. Notably, the remainder of the first prong is
satisfied according to the same analysis as just described above—i.e., the investments managed
by the Federal Reserve are made under the program established by the Secretary for investing
in Section 13(3) facilities. Accordingly, SIGPR believes it has jurisdiction over the Section 13(3)
facilities in which the Secretary invests and intends to exercise this jurisdiction to identify fraud
against the Federal Reserve, Secretary of the Treasury, and American taxpayer.
In sum, SIGPR’s jurisdiction over section 4003 programs involves overseeing an appropriation of
$500 billion for loans and investments that may ultimately lead to more than $2 trillion in
financing. The sheer size of the section 4003 programming, and the risk for fraud associated
with such a large volume of financing, will place a significant demand on SIGPR’s resources and
require continued partnership with the Fed IG and others.
Title IV, Subtitle B—Payroll Support Program. Subtitle B of CARES Act, Division A, Title IV is
titled “Air Carrier Worker Support” and empowers the Secretary to establish the program
known as the Payroll Support Program (PSP). This program provides up to $25 billion for
passenger air carriers, $4 billion for cargo air carriers, and $3 billion for eligible industry
contractors to be used primarily to service payroll costs.20 As of September 3, 2020, Treasury
had provided relief under the PSP to 343 passenger air carriers, 36 cargo air carriers, and 216
contractors.21
Under the PSP, Treasury provides air carriers and contractors with assistance in amounts equal
to what those entities spent on wages, salaries, and benefits in the six-month period from April
1, 2019, through September 30, 2019.22 Congress specifically directed the Treasury IG to audit
certifications that air carriers and contractors must make under subsection 4113(a) concerning
the amounts they spent on wages, salaries, and benefits during that period.23 But the PSP also
requires that air carriers and contractors satisfy a host of important conditions not listed in
subsection 4113(a) in order to receive assistance. For example, “[t]o be eligible for financial
assistance” under the PSP, an applicant must agree or certify that it will refrain from
involuntary furloughs through September 30, 2020, and refrain from stock buybacks or
dividend payments through September 30, 2021.24 Air carriers and contractors receiving PSP
assistance also must agree to certain limitations on the compensation they can pay to their
executives during the period from March 24, 2020, through March 24, 2022.25 Further,
20 Id. § 4112(a).
21 See Payroll Support Program Payments, U.S. Dep’t Treasury (last accessed September 15, 2020),
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-program-
payments.
22 CARES Act § 4113(a).
23 Id. § 4113(d).
24 Id. § 4114(a)(1)-(3).
25 Id. § 4116.
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recipients of PSP funding agree to “use the Payroll Support exclusively for the continuation of
payment of Wages, Salaries, and Benefits to the Employees of the Recipient.”26
SIGPR shares core jurisdiction over the PSP under the second prong of its jurisdictional
mandate. That is because the statutory provisions creating the PSP fall within Division A of the
CARES Act—i.e., the program is established under Division A—and because the PSP is managed
by the Secretary.27 Moreover, because the Secretary has received warrants from some PSP
participants—i.e., the Secretary has made “investments” in those entities—SIGPR also has
jurisdiction over those particular transactions under the first prong of its jurisdiction.
While Congress charged the Treasury IG with auditing a specific set of certifications air carriers
and contractors make under subsection 4113(a), SIGPR believes its jurisdiction covers the
additional certifications and requirements under Sections 4114, 4115, and 4116, as well as
under the terms of the Payroll Support Program Agreement, which present opportunities for
fraud and other illegal conduct. And because Congress expressly authorized the Treasury IG to
“audit certifications made under subsection (a)” of Section 4113,28 but did not assign Treasury
IG a role under any other section or subsection of the PSP, SIGPR intends to monitor the
certifications and agreements that air carriers and contractors make concerning use of funds,
involuntary furloughs, stock buybacks, dividend payments, and executive compensation to
receive PSP assistance, as well as recipient compliance with those certifications and
agreements. Further, to the extent a PSP recipient provides the Secretary a note or warrant in
exchange for PSP assistance, SIGPR intends to report on that investment in SIGPR’s quarterly
reports.29
Title V—Coronavirus Relief Fund. Title V of CARES Act, Division A amends the Social Security
Act to create what is known as the Coronavirus Relief Fund—a $150 billion appropriation to aid
states and municipalities. This provision of the CARES Act authorizes the Secretary to “pay each
State and Tribal government, and each unit of local government that meets [certain]
condition[s] . . . the amount determined for the State, Tribal government, or unit of local
government” according to parameters set forth within Title V.30 The Coronavirus Relief Fund
falls within SIGPR’s core jurisdiction because the statutory provisions creating it are within
Division A of the CARES Act—i.e., the program is established under Division A—and because the
program is managed by the Secretary.31
26 Payroll Support Program Agreement, Terms and Conditions, https://home.treasury.gov/system/files/136/Form-
of-PSP-Agreement.pdf.
27 See CARES Act § 4018(c)(1) (“It shall be the duty of the Special Inspector General to . . . conduct, supervise, and
coordinate audits and investigations of . . . the management by the Secretary of any program established under
this Act.”); id. § 3 (“Except as expressly provided otherwise, any reference to ‘this Act’ contained in any division of
this Act shall be treated as referring only to the provisions of that division.”).
28 Id. § 4113(d) (emphasis added).
29 See id. §§ 4018(c)(1), 4018(f)(1)(B).
30 Id. § 5001(a).
31 See Id. §§ 3, 4018(c)(1).
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The Coronavirus Relief Fund involves several certifications and limitations that present
opportunities for fraud, waste, and abuse. As part of the Secretary’s management of this
program, for example, Treasury has explained that “Funds may not be used to fill shortfalls in
government revenue to cover expenditures that would not otherwise qualify under the
statute,” “that payments be used only to cover costs that were not accounted for in the budget
most recently approved as of March 27, 2020,” and “that payments from the Fund may only be
used to cover costs that were incurred during the period that begins on March 1, 2020, and
ends on December 30, 2020.”32 SIGPR believes these kinds of requirements and limitations
deserve careful attention.
Congress specifically provided that “[t]he Inspector General of the Department of the Treasury
shall conduct monitoring and oversight of the receipt, disbursement, and use of funds made
available under this section.”33 Consistent with this mandate, Treasury IG has already issued
important reporting and record-retention guidance to Fund recipients.34 Congress also
specifically provided, however, that “[n]othing in this subsection”—that is, the subsection
assigning Treasury IG a monitoring and oversight role—“shall be construed to diminish the
authority of any Inspector General.”35 That would include SIGPR, meaning the paragraph
assigning Treasury IG an oversight role with respect to the Coronavirus Relief Fund may not be
construed to diminish SIGPR’s authority to exercise concurrent jurisdiction over the program.
Nevertheless, given Treasury IG’s active work on this program, SIGPR’s emphasis on
deconfliction, and the need for oversight as it relates to other CARES Act funding, SIGPR does
not intend to prioritize directing its limited resources to Coronavirus Relief Fund issues at this
time.
Title VI—Loans to the United States Postal Service. Title VI of CARES Act, Division A provides
that “the Secretary of the Treasury may lend up to [$10,000,000,000] at the request of the
Postal Service, upon terms and conditions mutually agreed upon by the Secretary and the
Postal Service.”36 On July 29, 2020, Treasury announced “it had reached an agreement with the
United States Postal Service (USPS) on the material terms and conditions of a loan of up to $10
billion to the USPS under Section 6001.”37
32 Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments, U.S. Dep’t Treasury, at 1–
2 (Sept. 2, 2020), https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-State-
Territorial-Local-and-Tribal-Governments.pdf.
33 Social Security Act (SSA) § 601(f)(1).
34 See Memorandum for Coronavirus Relief Fund Recipients, U.S. Dep’t Treasury Office of Inspector General (July 2,
2020), https://home.treasury.gov/system/files/136/IG-Coronavirus-Relief-Fund-Recipient-Reporting-Record-
Keeping-Requirements.pdf.
35 SSA § 601(f)(4) (emphasis added).
36 CARES Act § 6001(b)(2).
37 Press Release, Treasury and United States Postal Service Reach Agreement on Terms of CARES Act Loan, U.S.
Dep’t Treasury (July 29, 2020), https://home.treasury.gov/news/press-releases/sm1071.
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As with the direct loans under paragraphs 4003(b)(1)–(3), Treasury’s agreed loan with USPS falls
within SIGPR’s core jurisdiction. First, the transaction involves the making and management of a
loan. Next, the loan is made by the Secretary. The loan is also made by the Secretary under a
program established by the Secretary. That is, the Secretary of the Treasury, and not any other
individual or entity, established the processes to be used in determining whether, on what
terms, and how much to loan the USPS. And the Secretary established this program under
Division A of the CARES Act. Thus, all elements of the first prong of SIGPR’s jurisdiction are
satisfied. Because the program was established under Division A, SIGPR also has jurisdiction
over the loan program under the second prong, which covers “the management by the
Secretary of any program established under” Division A.
* * *
These four areas of programming alone involve nearly $700 billion in potential direct funding,
with the possibility of supporting well over $2 trillion in financing. If Congress did not intend to
grant SIGPR jurisdiction over any of these programs, or if Congress otherwise intended to limit
SIGPR’s core jurisdiction, Congress may clarify that by amending the text of the CARES Act.
Lingering Ambiguities
In SIGPR’s view, the foregoing programs clearly fall within SIGPR’s core jurisdiction. The status
of other programs, however, remains unclear, and ambiguities linger that may warrant
legislative clarification.
The Paycheck Protection Program (PPP) is the primary example of a program over which
SIGPR’s jurisdiction remains unclear. It is safe to say SIGPR does not have jurisdiction over the
PPP under the first prong of its jurisdiction, because the program does not involve loans, loan
guarantees, or other investments made by the Secretary under a program established by the
Secretary.38 To the contrary, the Small Business Administration (SBA), not the Secretary, “is
empowered . . . to make loans” for the PPP,39 and the SBA, not the Secretary, “may guarantee
covered loans” under the program.40 There do not appear to be “other investments” related to
the PPP.
Whether the PPP satisfies the second prong of SIGPR’s jurisdiction is an open question. Under
this prong, SIGPR would have jurisdiction over any “management by the Secretary” of the
PPP.41 The critical question is whether, or to what extent, the Secretary manages the program.
Some factors suggest the SBA, not the Secretary, manages the PPP. Foremost among these
factors is that, as mentioned above, the CARES Act amends the Small Business Act to ostensibly
assign the major PPP operational functions to the SBA. As noted, the SBA makes and guarantees
38 See CARES Act § 4018(c)(1).
39 15 U.S.C. § 636(a).
40 CARES Act § 1102(a)(2).
41 Id. § 4018(c)(1).
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the loans made available by the PPP.42 And when it comes to the loan-forgiveness process—the
marquee feature of the PPP—Congress charged the SBA with “issu[ing] guidance and
regulations implementing” the process43; “remit[ting] to the lender” any forgiven loan
amount44; conducting advanced purchases of covered loans according to reports submitted to
the SBA from lenders approved for that purpose by the SBA45; determining a recipient’s status
as a seasonal employer46; and identifying and requiring any additional necessary
documentation not required by statute for forgiveness applications. 47 Consistent with this
authority, the SBA has issued several interim final rules regarding the functioning of the PPP.48
In sum, the CARES Act consistently contemplates the SBA as running the day-to-day functioning
of the PPP, and the SBA has acted in accord with that view.
Other factors, however, strongly suggest the Secretary, too, has a role in managing the PPP. For
example, the CARES Act expressly provides that the SBA and “the Secretary of the Treasury may
prescribe regulations granting de minimis exemptions from the” CARES Act’s statutory limits on
forgivable loan amounts.49 The Secretary has exercised this authority to issue relevant, interim
final rules jointly with the SBA.50 Even more probative, Section 1109 of the CARES Act—in Title
I, which creates the PPP—is titled, “United States Treasury Program Management Authority.”51
Among other things, this section obligates the Secretary, “in consultation with the [SBA]
Administrator, and the Chairman of the Farm Credit Administration,” to establish criteria and
promulgate guidance for “lenders that do not already participate in lending under programs of
the Administration, to participate in the paycheck protection program.”52 The Secretary has
exercised this authority as well, issuing interim final rules on point without the SBA.53
Notably, subsection 1109(h) provides that the SBA “shall administer the program established
under this section” “[w]ith guidance from the Secretary.”54 Assuming this provision means the
42 See id. § 1102(a)(2); 15 U.S.C. § 636(a).
43 CARES Act § 1106(k).
44 Id. § 1106(c)(3).
45 Id. § 1106(c)(4).
46 See, e.g., id. § 1106(d)(2)(A)(ii)(II),
47 Id. § 1106(e)(4).
48 See, e.g., Lender Forms and Guidance, U.S. Small Business Administration (last visited Sept. 20, 2020),
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program#section-
header-9.
49 CARES Act § 1106(d)(6).
50 See, e.g., 85 FR 33004 (May 28, 2020), https://www.federalregister.gov/documents/2020/06/01/2020-
11536/business-loan-program-temporary-changes-paycheck-protection-program-requirements-loan-forgiveness.
51 CARES Act § 1109.
52 Id. § 1109(b).
53 See, e.g., 85 CFR 23917 (Apr. 30, 2020), https://www.federalregister.gov/documents/2020/04/30/2020-
09239/small-business-administration-business-loan-program-temporary-changes-paycheck-protection.
54 CARES Act § 1109(h). Unsurprisingly, there is ambiguity surrounding which “program” this provision refers to.
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SBA administers the “program” of authorizing new lenders to facilitate PPP loans, a few
takeaways emerge. Section 1109 assigns “Management Authority” to the Secretary, which
appears to come in the form of issuing rules and providing the SBA “guidance,” and subsection
1109(h) assigns the SBA the role of “Program Administration,” which appears to come in the
form of carrying out operational duties like “the making and purchasing of guarantees on
loans.”55 One can easily see how the structure created by subsection 1109(h)—the Secretary
manages and the SBA administers—might be analogized to the structure of the PPP as a whole.
After all, the SBA administers the PPP by carrying out the major operational duties like
guaranteeing and forgiving loans while the Secretary has issued rules for the PPP—both on its
own and in consultation with the SBA—and has otherwise provided the SBA guidance on
program administration.
There is more. Even some PPP guidance the SBA has posted was developed “in consultation
with the Department of the Treasury.”56 And when certain PPP loan-level data was released
publicly, that data was hosted by the Department of the Treasury.57 Not to mention, Section
1107 gives Treasury $25M “for carrying out section 1109.”58 That is the same sum of money
allotted to SIGPR to operate for five years, suggesting Congress anticipated Treasury would
have a substantial and active role in the PPP.
Finally, other factors are perhaps a wash. For example, the SBA hosts a public webpage
dedicated to the PPP.59 But so does Treasury.60 The SBA’s webpage includes a host of PPP rules,
forms, and guidance papers—but so does Treasury’s PPP webpage.
At bottom, much of Title I of the CARES Act strongly indicates Congress contemplated that the
SBA would run the PPP. But as the foregoing factors show, that may not answer the ultimate
question whether, or to what extent, there is “management by the Secretary” associated with
the program. Some factors suggest the Secretary merely has a sizeable consulting role in the
PPP but that the SBA “manages” the program—even if it does so with guidance and assistance
Most likely, it refers to the “program” of allowing “ insured depository institutions, insured credit unions,
institutions of the Farm Credit System chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.), and
other lenders that do not already participate in lending under programs of the Administration, to participate in the
paycheck protection program.” Id. § 1109(b).
55 Id. § 1109(h).
56 See, e.g., Paycheck Protection Program Loans Frequently Asked Questions (FAQs), U.S. Small Business
Administration (Aug. 11, 2020), https://www.sba.gov/sites/default/files/2020-
08/Final%20PPP%20FAQs%20%28August%2011%2C%202020%29-508.pdf.
57 SBA Paycheck Protection Program Loan Level Data, U.S. Dep’t Treasury (last visited Sept. 20, 2020),
https://home.treasury.gov/policy-issues/cares-act/assistance-for-small-businesses/sba-paycheck-protection-
program-loan-level-data.
58 CARES Act § 1107(a).
59 Paycheck Protection Program, U.S. Small Business Administration (last visited Sept. 20, 2020),
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
60 The CARES Act Provides Assistance to Small Businesses, U.S. Dep’t Treasury (last visited Sept. 20, 2020),
https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses.
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from the Secretary. Yet other factors strongly suggest the Secretary, both textually and
practically, has a major management role in the PPP. It is also worth noting that SIGPR has
received and responded to several letters from Congressional members suggesting that at least
some in Congress believe the legislation they passed granted SIGPR jurisdiction over the PPP.61
* * *
Considering the difficulty and importance of this issue, SIGPR will continue to collect and assess
relevant information and intends to provide a definitive position on its legal jurisdiction over
the PPP in a later quarterly report. If, however, Congress specifically intended to grant SIGPR
jurisdiction over the PPP—or, if Congress specifically intended to omit the PPP from SIGPR’s
jurisdiction—Congress may clarify that by amending the text of the CARES Act.
Therefore, under paragraph 4018(c)(1), SIGPR concludes for now that it has clear jurisdiction—
with the caveats described above relating to concurrent jurisdiction, priorities, and lingering
ambiguities—over at least the following:
• Title IV, Subtitle A loans and loan guarantees made by the Secretary to passenger air
carriers, cargo air carriers, and businesses critical to maintaining national security
pursuant to paragraphs 4003(b)(1)–(3) and the management of those Section 13(3)
facilities in which the Secretary has invested pursuant to paragraph 4003(b)(4);
• Title IV, Subtitle B assistance to aviation industry workers under the PSP;
• Title V aid to states, municipalities, and Tribal governments under the Coronavirus Relief
Fund; and
• Title VI loans to the U.S. Postal Service.
SIGPR’s Jurisdiction is not Expanded by Collectible Information
There is another point of potential ambiguity in SIGPR’s jurisdiction. In its initial report, SIGPR
did not address the relationship between the list of information in subparagraphs (c)(1)(A)–(E)
and the jurisdictional mandate found in the first part of paragraph 4018(c)(1). SIGPR addresses
that issue here and concludes that the list does not expand SIGPR’s jurisdiction.
Under paragraph 4018(c)(1), SIGPR is to conduct audits and investigations “including by
collecting and summarizing” five subcategories of information. The first four of these
subcategories are relatively straightforward:
61 SIGPR received a letter from Senator Elizabeth Warren asserting SIGPR has jurisdiction “to investigate any fraud,
waste and abuse of” CARES Act funds. (Emphasis added.) SIGPR also received a letter from Senator Kelly Loeffler
and others asserting SIGPR has “the authority to investigate and audit all loans made or managed by the Secretary
of the Treasury, including those made under the Paycheck Protection Program.” These letters are included in
Appendix B.
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(A) A description of the categories of the loans, loan guarantees, and other investments
made by the Secretary.
(B) A listing of the eligible businesses receiving loan, loan guarantees, and other
investments made under each category described in subparagraph (A).
(C) An explanation of the reasons the Secretary determined it to be appropriate to make
each loan or loan guarantee under this Act, including a justification of the price paid for,
and other financial terms associated with, the applicable transaction.
(D) A listing of, and detailed biographical information with respect to, each person hired
to manage or service each loan, loan guarantee, or other investment made under
section 4003.62
Because each of these subcategories either explicitly relates to section 4003 or to “loans, loan
guarantees, and other investments made by the Secretary,” the scope of the information under
these subcategories clearly relates to activities within SIGPR’s jurisdiction. The last
subcategory—subparagraph 4018(c)(1)(E)—is not so limited, but rather includes:
(E) A current, as of the date on which the information is collected, estimate of the total
amount of each loan, loan guarantee, and other investment made under this Act that is
outstanding, the amount of interest and fees accrued and received with respect to each
loan or loan guarantee, the total amount of matured loans, the type and amount of
collateral, if any, and any losses or gains, if any, recorded or accrued for each loan, loan
guarantee, or other investment.63
On its face, subparagraph 4018(c)(1)(E) could be read as reaching beyond the two prongs of
SIGPR’s jurisdiction. That is because, as a literal matter, the phrase “loan, loan guarantee, and
other investment made under this Act” is not necessarily constrained to loans, loan guarantees,
or other investments made by the Secretary or as part of a program managed by the Secretary.
At this juncture, an apparent conflict arises from the fact that the jurisdictional statement in
paragraph 4018(c)(1)—which appears to be narrower than the scope of the list—authorizes
SIGPR to exercise that jurisdiction “including by” collecting the information listed in
subparagraphs 4018(c)(1)(A)–(E)—which appears to be broader than the scope of SIGPR’s
jurisdiction. Thus, there is ambiguity in what “including by” means.
The term “including” can ordinarily be read in two ways: 1) with the items following as
illustrative examples of what precedes, such that the items should be interpreted as narrower
than what precedes; or 2) as the functional equivalent of the term “and,” such that the items
following it add to what precedes.64 Context informs which sense of the term applies.
62 CARES Act § 4081(c)(1)(A)–(D).
63 Id. § 4018(c)(1)(E) (emphasis added).
64 See, e.g., Arizona State Bd. For Charter Sch. v. U.S. Dep’t of Educ., 464 F.3d 1003, 1007–09 (9th Cir. 2006); Adams
v. Dole, 927 F.2d 771 (4th Cir. 1991).
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For several reasons, SIGPR believes it is better here to read “including” as introducing
illustrative examples. First, paragraph 4018(c)(1), preceding the list, functions as the main
statement of jurisdiction for SIGPR. It would be counterintuitive to implicitly expand that
jurisdiction with a demonstrative list rather than doing so explicitly in the preceding subsection
outlining what SIGPR is to investigate and audit. Second, subparagraph 4018(c)(1)(E) seems to
make the most sense when read as continuing and complementing subparagraphs
4018(c)(1)(A)–(D). For example, subparagraph 4018(c)(1)(E) concerns reporting loan amounts
and other financial information but does not require reporting the kind of identifying and
decisional information required by subparagraphs (c)(1)(A)–(D). But (A) through (D) relate to
information about programs falling within the jurisdiction of SIGPR under the main statement in
(c)(1). It would be odd for Congress to provide in subparagraphs (c)(1)(A)–(D) for collecting
information about funding recipients, types, and decisional processes—but not financial data—
only for loans and investments by the Secretary, but then provide in subparagraph (c)(1)(E) for
collecting only financial data—but not information about funding recipients, types, and
decisional processes—for all loans and investments made under Division A, whether involving
the Secretary or not. On the other hand, it makes very good sense that Congress intended
subparagraphs (c)(1)(A)–(E) to be read as a whole and as painting a full picture for all the loans,
loan guarantees, and other investments made by the Secretary under Division A programs or as
part of a Division A program managed by the Secretary.
Accordingly, SIGPR believes that its jurisdiction is defined by the first part of Section 4018(c)(1)
and is not expanded by the list in subparagraphs 4018(c)(1)(A)–(E).
SIGPR in Context: Reporting Requirements
In its initial report to Congress, SIGPR discussed its reporting requirements under CARES Act
subparagraph 4018(f)(1)(B). The discussion there primarily concerned whether the
requirements in that subparagraph, which closely track the language of section 4003, reflected
an intent by Congress to limit SIGPR’s jurisdiction to only section 4003 activities. SIGPR
concluded that the reporting obligations should not be read to limit SIGPR’s jurisdiction. Here,
SIGPR presents new analysis on whether the reporting requirements in subparagraph
4018(f)(1)(B)—and the provisions it cites—impose upon SIGPR certain data-collection
requirements.
The CARES Act directs SIGPR to submit quarterly reports that include information on only a
subset of the programs potentially within its jurisdiction. Those reports “shall include” two
categories of information:
1. “a detailed statement of all loans, loan guarantees, other transactions, obligations,
expenditures, and revenues associated with any program established by the Secretary
under section 4003,” and
2. “the information collected under subsection (c)(1).”65
65 CARES Act § 4018(f)(1)(B).
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The first category of reportable information includes:
• loans and loan guarantees for passenger air carriers and related businesses, made
under paragraph 4003(b)(1);
• loans and loan guarantees for cargo air carriers, made under paragraph 4003(b)(2);
• loans and loan guarantees for businesses critical to maintaining national security,
made under paragraph 4003(b)(3); and
• the Secretary’s investments into facilities established by the Board of Governors of
the Federal Reserve System for the purpose of providing liquidity to the financial
system, made under paragraph 4003(b)(4).66
As it relates to the first category of reportable information, then, the phrasing of subparagraph
4018(f)(1)(B) means that SIGPR’s quarterly reports “shall include” this section 4003 data. The
phrasing of 4018(f)(1)(B) as it relates to the second category of reportable information,
however, is more ambiguous.
In providing that SIGPR’s quarterly reports “shall include . . . the information collected under
subsection (c)(1),” subparagraph 4018(f)(1)(B) plainly requires SIGPR to report any information
collected under (c)(1) but does not itself appear to require SIGPR to collect that information in
the first place. The duty to report what is collected, in other words, is not itself a duty to collect.
This naturally raises the question whether the language of paragraph 4018(c)(1) obligates SIGPR
to collect the relevant information.
The jurisdictional statement in paragraph 4018(c)(1) assigns SIGPR the “duty” to conduct audits
and investigations, “including by collecting and summarizing” the information listed in
subparagraphs 4018(c)(1)(A)–(E). The relationship between “collecting and summarizing”
information and SIGPR’s duty to “conduct, supervise, and coordinate audits and investigations”
is somewhat ambiguous. There are two possibilities here: 1) SIGPR must collect and summarize
the information listed in (c)(1)(A)–(E) as part of its “duty” to conduct audits and investigations,
regardless of whether SIGPR believes such collection will further those functions, or 2)
“collecting and summarizing” the information is one way SIGPR may conduct audits and
investigations, subject to SIGPR’s determination that collecting such information will further an
audit or investigation. There are reasons for each interpretation.
Weighing in favor of the mandatory reading is that, as discussed above, the word “including” in
paragraph 4018(c)(1) serves an illustrative function, so that what follows the word is illustrative
of what precedes it. What precedes the word “including,” in this case, is SIGPR’s mandate,
which provides, in part, “[i]t shall be the duty of the Special Inspector General to . . . conduct,
supervise, and coordinate audits and investigations.”67 Because “collecting and summarizing”
the (c)(1)(A)–(E) list of information follows the word “including,” that activity is illustrative of
SIGPR’s “duty” to “conduct, supervise, and coordinate audits and investigations.” That is,
66 See SIGPR in Context: Jurisdictional Updates, supra.
67 CARES Act § 4018(c)(1).
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collecting and summarizing the listed information is included in the duty to audit and
investigate. The clearest way to express this interpretation is with the operative language of
paragraph 4018(c)(1): “It shall be the duty of the Special Inspector General to . . . conduct,
supervise, and coordinate audits and investigations . . . , including by collecting and
summarizing the” information listed in subparagraphs (c)(1)(A)–(E).
Moreover, the specificity with which subparagraphs (c)(1)(A)–(E) are written is inconsistent
with the idea that SIGPR may exercise discretion over whether to collect the information and
for which transactions. For example, subparagraph (c)(1)(B) requires SIGPR to collect
information on “each category described in subparagraph (A).”68 Subparagraph (c)(1)(C)
requires SIGPR to collect information on “the reasons the Secretary determined it to be
appropriate to make each loan or loan guarantee under this Act.”69 Subparagraph (c)(1)(D)
requires SIGPR to collect information on “each person hired to manage or service each loan,
loan guarantee, or other investment made under section 4003.”70 And subparagraph (c)(1)(E)
requires SIGPR to collect information on “each loan, loan guarantee, and other investment
made under this Act that is outstanding.”71 Thus, the language of subparagraphs (c)(1)(A)–(E)
seems to contemplate SIGPR collecting information on each loan and investment, not simply
the loans and investments SIGPR chooses to be the subject of a particular audit or investigation.
Weighing in favor of the permissive reading is the fact that SIGPR does not read the (c)(1)(A)–
(E) list following the phrase “including by” literally, because, as discussed earlier, doing so
would mean collecting information beyond the scope of SIGPR’s jurisdiction. In that light, it
cannot be that SIGPR must collect and summarize all the information in the (c)(1)(A)–(E) list.
Because SIGPR must exercise judgment in determining the scope of information (c)(1)(A)–(E)
authorizes it to collect, it is reasonable also to exercise judgment in determining whether to
collect such information. Importantly, SIGPR’s ability to exercise its own judgment in
determining whether to collect certain authorized information in furtherance of audits and
investigations accords with the latitude afforded IGs under the Inspector General Act of 1978 to
decide which audits and investigations to pursue and how best to pursue them. As a practical
matter, moreover, SIGPR lacks the budget and resources to audit and investigate each loan and
investment made by the Secretary. And in the course of any particular audit or investigation, it
often would make no sense to collect information about loans or investments that are not the
subject of the audit or investigation.72
68 Id. § 4018(c)(1)(B) (emphasis added).
69 Id. § 4018(c)(1)(C) (emphasis added).
70 Id. § 4018(c)(1)(D) (emphasis added).
71 Id. § 4018(c)(1)(E) (emphasis added).
72 One concern is that, if the statute required SIGPR to submit quarterly reports of the information under
subparagraphs 4018(c)(1)(A)–(E) as part of SIGPR’s duty to conduct specific audits and investigations, then the
reporting requirements of subparagraph 4018(f)(1)(B) effectively would require SIGPR to publicly reveal the
existence and contents of open audits and investigations.
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Either way, the reporting requirements in subparagraph 4018(f)(1)(B) should not drive the
decision over which interpretation of paragraph 4018(c)(1) prevails.73 But because SIGPR finds
that most of the information described in subparagraphs 4018(c)(1)(A)–(E) would be helpful to
understanding the programs under SIGPR’s core jurisdiction and identifying opportunities for
fraud, SIGPR will endeavor to collect and report that information so long as it furthers SIGPR’s
overall statutory mission.
73 Even assuming the CARES Act requires collection of all the information in subparagraphs 4018(c)(1)(A)–(E), that
does not necessarily answer when it should be collected.
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SIGPR in Context: CARES Act Program Eligibility & Oversight
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
Title I, the Keeping American Workers Paid and Employed Act
Paycheck Protection
Program (PPP)
1102
The Paycheck Protection
Program is designed to
provide a direct incentive
for small businesses to keep
their workers on the payroll.
SBA will forgive loans if all
employee retention criteria
are met, and the funds are
used for eligible expenses.74
• Borrower must be a business concern, nonprofit
organization, veterans organization, or Tribal
business concern. 15 U.S.C. § 636(a)(36)(D)(i).
• Borrower, together with its affiliates, must not
have more than 500 employees. 15 U.S.C.
§ 636(a)(36)(D)(i)(I); 13 C.F.R. § 121.301(a)(2).
o There are limited exceptions to this
requirement. 15 USC § 636(a)(36)(D)(i)(II).
• Loan must be used for payroll costs, group
healthcare benefit costs, mortgage interest, rent,
utilities, and interest on debt incurred prior to
February 15, 2020. 15 U.S.C. § 636(a)(36)(F).
• Borrower must certify that “the uncertainty of
current economic conditions makes necessary
the loan request to support the ongoing
operations of the [borrower].” 15
U.S.C.
§ 636(a)(36)(G)(i)(I); 13 C.F.R. § 121.301(a)(2).
• Borrower must not have another application
pending for another PPP loan or receive amounts
SBA OIG 75
74 Paycheck Protection Program, U.S. Small Business Administration (last visited Sept. 28, 2020), https://www.sba.gov/funding-programs/loans/coronavirus-
relief-options/paycheck-protection-program.
75 The oversight entities listed in this chart are limited to those entities expressly assigned a program-specific role by the CARES Act or that otherwise have
institutional responsibility for the agency charged with program implementation. It is for that reason the chart does not include the Pandemic Response
Accountability Committee (PRAC). SIGPR takes no position on the PRAC’s jurisdiction over the listed programs. Although SIGPR is a member of the PRAC, SIGPR
does not speak for the PRAC. The contents of this report do not necessarily represent the views of the PRAC.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
26
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
under another PPP loan for the same purpose and
duplicative of amounts applied for or received
under
a
covered
loan.
15
U.S.C.
§ 636(a)(36)(G)(i)(III-IV).
Emergency
Economic Injury
Disaster Loans
(EIDL)
1110
The EIDL program is
designed to provide
economic relief to
businesses that are
currently experiencing a
temporary loss of revenue
due to COVID-19.76 It
provides $10,000
emergency grants for small
businesses and expands
eligibility for SBA disaster
loans.
• Grant recipient may use the funds for any
allowable purpose for a loan under 15 U.S.C.
§ 636(b)(2), including to provide paid sick leave to
employees unable to work because of COVID-19,
to maintain payroll, to meet increased costs
because of supply chain disruptions, to cover rent
or mortgage payments, or to repay obligations
that cannot be met due to revenue losses. CARES
Act § 1110(e)(4).
• Grant recipient or borrower, together with its
affiliates, must be a business, cooperative, or
employee stock ownership plan with not more
than 500 employees. CARES Act § 1110(a)(2); 13
C.F.R. § 121.301(a)(2).
• Grant recipient or borrower must have been in
business prior to January 31, 2020. CARES Act
§ 1110(c)(2).
• Grant recipient or borrower must have “suffered
a substantial economic injury as a result of”
COVID-19. CARES Act § 1110(f)(5); 15 U.S.C.
§ 636(b)(2)(D).
SBA OIG
76 Economic Injury Disaster Loans, U.S. Small Business Administration (last visited Sept. 29, 2020), https://www.sba.gov/funding-programs/loans/coronavirus-
relief-options/economic-injury-disaster-loans.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
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Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
Title II, Assistance for American Workers, Families, and Businesses
Pandemic
Unemployment
Assistance Program
(PUA)
2102
Provides workers who are
unemployed due to Covid-
19 with up to 39 weeks of
unemployment benefits.
• Limited to individuals who are not eligible for
regular compensation or extended benefits
under state or federal law or under CARES Act
§ 2107, including because they have exhausted
such benefits. CARES Act § 2102(a)(3)(A)(i).
• Limited to individuals who are otherwise able
and available to work but are unemployed or
unable to work due to COVID-19. CARES Act
§ 2102(a)(3)(A)(ii).
• Limited to 39 weeks of benefits, including any
weeks for which the individual receives regular
benefits. CARES Act § 2102(c)(2).
Labor OIG
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
Pandemic
Emergency
Unemployment
Compensation
Program
2107
Provides States with funding
to pay individuals for 13
additional weeks of
unemployment
compensation at the State
level plus $600, as well as
administrative costs for
implementation.
• Limited to individuals who have exhausted all
rights to regular compensation under State and
Federal law with respect to a benefit year and
have no rights to regular compensation with
respect to a week under such laws. CARES Act
§ 2107(a)(2)(A)–(B).
• Limited to individuals able, available, and
actively seeking to work. CARES Act
§ 2107(a)(2)(D).
• Limited to 13 weeks of benefits. CARES Act
§ 2017(b)(2).
Labor OIG
Title IV, Economic Stabilization and Assistance to Severely Distressed Sectors of US Economy
Subtitle A
Loans, Loan
Guarantees, and
other Investments
by the Secretary of
the Treasury
4003(b)(1)–(3)
Allocates up to $46 billion
for loans and loan
guarantees to passenger air
carriers, certain businesses
certified to provide
inspection and repair
services, ticket agents, cargo
air carriers, and businesses
critical to maintaining
national security.
• Limited to businesses “for which credit is not
reasonably available at the time of the
transaction.” CARES Act § 4003(c)(2)(A).
• “[T]he duration of the loan or loan guarantee is
as short as practicable and in any case not longer
than 5 years.” CARES Act § 4003(c)(2)(D).
• Recipient must agree that:
o until 12 months after the date the loan
or loan guarantee is no longer
outstanding, neither the recipient nor
any affiliate may purchase an equity
security that is listed on a national
securities exchange of the recipient or
any parent company of the recipient,
with some exceptions;
SIGPR; Congressional
Oversight Commission
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
o until 12 months after the date the loan
or loan guarantee is no longer
outstanding, the recipient shall not pay
dividends or make other capital
distributions with respect to the common
stock of the recipient;
o until September 30, 2020, the recipient
shall maintain its employment levels as
of March 24, 2020, to the extent
practicable, and in any case shall not
reduce its employment levels by more
than 10 percent from the levels on such
date. CARES Act § 4003(c)(2)(E)–(G).
• Limited to businesses “created or organized in
the United States or under the laws of the
United States and ha[ve] significant operations
in and a majority of [their] employees based in
the United States.” CARES Act § 4003(c)(2)(H).
• The “business must have incurred or is expected
to incur covered losses such that the continued
operations of the business are jeopardized, as
determined by the Secretary.” CARES Act
§ 4003(c)(2)(I).
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
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Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
Loans, Loan
Guarantees, and
other Investments
by the Secretary of
the Treasury
4003(b)(4)
Allocates at least $454
billion to backstop
emergency lending and
liquidity facilities set up by
the Federal Reserve under
section 13(3) of the Federal
Reserve Act.
• Limited to “businesses that are created or
organized in the United States or under the laws
of the United States and that have significant
operations in and a majority of its employees
based in the United States.” CARES Act
§ 4003(c)(3)(C).
SIGPR (for the listed
facilities in which
Treasury has invested
under 4003(b)(4));
Congressional
Oversight Commission;
Fed Reserve OIG
Main Street
Lending
Program
Supports lending to small
and medium-sized
businesses and nonprofit
organizations that were in
sound financial condition
before the onset of the
COVID-19 pandemic. The
MSLP includes five facilities:
the MSNLF, MSELF, MSPLF,
NONLF, and NOELF. The
Federal Reserve Bank of
Boston has established one
SPV to manage and operate
all five facilities.77
• At least 10 employees, but either 15,000 or
fewer employees or 2019 revenue of $5 billion
or less.78
• Non-profit organizations are further limited by
the following requirements:
o Total non-donation revenues of at least
60% of expenses for 2017 through 2019
o At least a 2% operating margin for 2019
o At least 60 days current cash on hand
o Ratio of cash, investments, and other
repayment resources to outstanding
debt and certain other liabilities of
greater than 55%.
77 Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act, Federal Reserve Board
(Sept. 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=7.
78 For specific terms of the Main Street programs available to for-profit companies, see the relevant term sheets at:
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a3.pdf;
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a2.pdf;
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a2.pdf. For programs available to non-profit organizations, see the
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
31
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
• Established prior to March 13, 2020.
• Not engaged in business activity that would
make the borrower ineligible for an SBA loan
under 13 C.F.R. § 120.110 (b)–(j) and (m)–(s).
• Created or organized in the United States or its
laws with significant operations and a majority
of employees based in the United States.
• Not also participating in other Main Street
programs or the Primary Market Corporate
Credit Facility.
• Has not received other support under Title IV,
Subtitle A of the CARES Act.
Corporate
Credit
Facilities
The Board has authorized
two facilities to support
credit to large employers—
the PMCCF for new bond
and loan issuances and the
SMCCF to provide liquidity
for outstanding corporate
bonds (together, corporate
credit facilities, or the CCFs).
The Federal Reserve Bank of
New York (FRBNY) has
established one SPV to
• Created or organized in the United States or its
laws with significant operations and a majority
of employees based in the United States.80
• Had an investment grade credit rating on March
22, 2020, and at least a rating of BB-/Ba3 at the
time of issuing securities to the facility.
• Not an insured depository institution,
depository institution holding company, or a
subsidiary of such an organization, as defined by
the Dodd-Frank Act.
relevant term sheets at: https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a10.pdf;
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a11.pdf.
80 For specific terms of the Primary Corporate Credit Facility, see https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a9.pdf.
For specific terms of the Secondary Corporate Credit Facility, see https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a1.pdf.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
32
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
manage and operate the
CCFs.79
• Has not received specific support from the
CARES Act or subsequent federal legislation.
• Satisfies the conflict-of-interest requirements
under CARES Act Section 1019.
Municipal
Liquidity
Facility
Supports lending to state,
city, and county
governments, certain
multistate entities, and
other issuers of municipal
securities. The FRBNY
operates the facility.81
• Must be one of the following:82
o a state;
o a city exceeding 250,000 residents or is
designated to participate in the facility by
the state governor;
o a county exceeding 500,000 residents or is
designated to participate in the facility by
the state governor;
o a multi-state entity; or
o a state or political subdivision agency that
issues bonds secured by revenue from a
government-owned source and is designated
by the state government to participate in the
facility.
• States, cities, and counties must have an
investment-grade credit rating as of April 8,
2020, and at the time of issuance to the facility,
must have a credit rating of at least BB-/Ba3.
• Multi-state entities and agencies issuing bonds
secured by revenue from a government-owned
79 Periodic Report, supra note 77.
81 Periodic Report, supra note 78.
82 For specific terms of the Municipal Liquidity Facility, see https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200811a1.pdf.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
33
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
source must have a credit rating a A-/A3 as of
April 8, 2020 and must maintain at least an
investment-grade credit rating at the time of
issuance to the facility.
TALF II
The FRBNY lends to an SPV,
which makes loans to U.S.
companies secured by
certain AAA-rated asset-
backed securities (ABS)
backed by recently
originated consumer and
business loans.83
• Created or organized in the United States or its
laws with significant operations and a majority
of employees based in the United States.84
• Maintain an account with a TALF Agent
designated by the facility.
• Sponsor or manager has not received other
support under Title IV, Subtitle A of the CARES
Act.
Subtitle B
Payroll Support
Program (PSP)
4112
Provides financial assistance
to be used exclusively for
employee wages, salaries,
and benefits. Allocates up to
$25 billion for passenger air
carriers, up to $4 billion for
cargo air carriers, and up to
$3 billion for airline
contractors.
• Applicants may receive funds in the amount of
wages, salaries, benefits, and other
compensation they certify (or previously
reported) they paid their employees during the
period from April 1, 2019, through September
30, 2019. CARES Act § 4113(a)(1)–(3).
• Applicants must “enter into an agreement with
the Secretary, or otherwise certify” that they will:
o refrain from conducting
involuntary
furloughs or reducing pay rates and
benefits until September 30, 2020;
SIGPR; Treasury OIG
83 Periodic Report, supra note 78.
84 For specific terms of the TALF program, see https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
34
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
o through September 30, 2021, refrain from
purchasing an equity security of the
applicant or the parent company of the
applicant that is listed on a national
securities exchange;
o through September 30, 2021, refrain from
paying dividends, or making other capital
distributions, with respect to the common
stock (or equivalent interest) of the air
carrier or contractor; and
o meet the requirements of sections 4115
and 4116. CARES Act § 4114(a)(1)–(4).
• During the 2-year period beginning March 24,
2020, and ending March 24, 2022, no officer or
employee of
the
applicant
whose
total
compensation exceeded $425,000 in calendar
year 2019 (with some exceptions)
o will receive total compensation which
exceeds, during any 12 consecutive
months of such 2-year period, the total
compensation received in calendar year
2019;
o will receive severance pay or other
benefits
upon
termination
of
employment which exceeds twice the
maximum total compensation received by
the officer or employee in calendar year
2019.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
35
Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
• During the 2-year period beginning March 24,
2020, and ending March 24, 2022, no officer or
employee of the eligible business whose total
compensation exceeded $3,000,000 in calendar
year 2019 may receive during any 12 consecutive
months of such period total compensation in
excess of the amounts specified by the CARES Act.
CARES Act § 4106(a)(1)–(3).
• “The Recipient shall use the Payroll Support
exclusively for the continuation of payment of
Wages, Salaries, and Benefits to the Employees of
the Recipient.”85
Title V, Coronavirus Relief Funds
Coronavirus Relief
Fund
5001
Provides $150 billion to
States, Territories, and
Tribal governments to use
for expenditures incurred
due to COVID-19.
• Limited to use for necessary expenditures
incurred due to COVID–19 that were not
accounted for in the most recent budget and
incurred between March 1 and December 30,
2020. SSA § 601(d).
o Funds may not be used to fill shortfalls in
government revenue to cover
expenditures that would not otherwise
qualify under the statute.86
SIGPR; Treasury OIG
85 Payroll Support Program Agreement, Terms and Conditions, U.S. Dep’t Treasury (last visited Sept. 30, 2020),
https://home.treasury.gov/system/files/136/Form-of-PSP-Agreement.pdf.
86 Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments, U.S. Dep’t Treasury (Sept. 2, 2020),
https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-State-Territorial-Local-and-Tribal-Governments.pdf.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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Name of Program
CARES Act
Section
Brief Summary
Program Eligibility Restrictions
Oversight Entities
o A cost is “not accounted for in the most
recent budget” if either (a) the cost
cannot lawfully be funded using a line
item, allotment, or allocation within that
budget or (b) the cost is for a
substantially different use from any
expected use of funds in such a line item,
allotment, or allocation.87
Title VI, USPS Loans
Loans to USPS
6001
Authorizes the U.S. Postal
Service to borrow, and the
Secretary of the Treasury to
lend, up to $10 billion to
fund operating expenses.
• Funds must “be used for such operating
expenses.” CARES Act § 6001(b)(1)(A).
• Funds “may not be used to pay any outstanding
debt of the Postal Service.” CARES Act
§ 6001(b)(1)(B).
SIGPR; Treasury OIG
87 Id.
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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SIGPR Mission and Core Values
The role and mission of the Office of the Special Inspector General for Pandemic Recovery
(SIGPR) is to safeguard the people’s tax dollars appropriated by Congress through the CARES
Act. SIGPR strives to ensure that the American taxpayer gets the best return on investment by
efficiently rooting out fraud, waste, and abuse. The importance of this mission in our Nation’s
history and to our Nation’s economic health and recovery cannot be overstated. Congress is
spending trillions of dollars to address our economic crisis, and SIGPR is a key part of making
sure that those dollars are used for their proper purpose: restoring our robust economy and
sustaining every American during these challenging times. Every dollar lost to fraud or abuse is
a dollar that deserving American families and businesses need.
Fidelity to our Constitution and the laws of our great Nation is a core SIGPR value. The mission
of the office is not to correct every wrong or solve every problem. Instead, through a specific
statutory mandate, SIGPR serves the people of the United States, who not only send their hard-
earned money to the federal government as taxpayers but, most importantly, also govern our
Nation through their democratically elected representatives. These elected representatives and
the President of the United States are directly accountable to the people of the United States.
Government must be by the consent of the governed. Consequently, all government officials
must be careful to exercise only the authority ultimately given by the consent of the governed
and remember that what they do is on the behalf of the American taxpayers.
In carrying out its mission, SIGPR’s goal is to treat everyone with respect, to operate with the
utmost integrity, and to be fair, objective, and independent.
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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MANAGEMENT AND
ADMINISTRATION
MANAGEMENT AND ADMINISTRATION
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
39
Building Momentum: Budgetary Updates
Congress appropriated $25 million to SIGPR, and that amount will remain available until
expended.88 SIGPR expects that this funding will sustain operations through FY 2021. In order to
fund ongoing operations beyond FY 2021, SIGPR has requested that the Office of Management
and Budget include a $25 million appropriation in the proposed President’s Budget for FY 2022.
Building Momentum: IT Updates
SIGPR operates in Alexandria, Virginia, using office space provided by the US Patent and
Trademark Office (USPTO). The USPTO has been very generous in allowing SIGPR to use its
existing internet resources, computer monitors, office furniture, wired telephones, and
printers. Pursuant to Treasury guidelines, however, SIGPR must secure other items like laptops
and mobile phones from the Departmental Offices of Treasury. Complicating the establishment
of a robust IT program is that SIGPR’s arrangement with the USPTO will end once SIGPR is up
and running on Treasury’s highly secure network. At that time, SIGPR will be required to obtain
all peripherals from the Departmental Offices of Treasury, meaning SIGPR will be required to
switch out telephones, monitors, printers, docking stations, cabling, and servers over the
coming weeks.
To accomplish this, SIGPR secured the services of an experienced Chief Information Officer
(CIO) on detail from the Department of the Interior. The CIO is working with multiple federal
entities, including the Council of the Inspectors General on Integrity and Efficiency, the
Pandemic Response Accountability Committee, various Treasury offices, the U.S. Department of
the Treasury Inspector General of Tax Administration, the U.S. Department of the Treasury
Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset
Relief Program, and the USPTO. Through its engagement with these organizations, SIGPR has
obtained, or is in the process of obtaining, mission-essential services, including end-user
technologies, enterprise networking, data management, data analytics, information security,
case management, cloud computing, hosting infrastructure, and our “sigpr.gov” domain and
website. The CIO’s efforts have created a platform for planning future geospatial, data
management, and analytics initiatives.
On September 18, 2020, under the leadership of the Assistant IG for Data Analytics, Evaluations
& Special Projects, SIGPR launched its website. SIGPR commends the Department of Treasury’s
IT services group for its strong partnership and invaluable support in expeditiously creating the
new website for SIGPR’s content. The website contains information about the office; how to
88 See CARES Act § 4018(g)(1).
MANAGEMENT AND ADMINISTRATION
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
40
report fraud, waste, or abuse to SIGPR; whistleblower protection; SIGPR reports; and related
news. The website can be found at www.sigpr.gov. An image of the homepage is below.
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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SIGPR OFFICES AND ACTIVITIES
SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
42
SIGPR Offices
SIGPR continues to be both proactive and reactive in the prevention, detection, and
investigation of fraud, waste, and abuse involving CARES Act funds and programs within SIGPR’s
jurisdiction.
Audits
The SIGPR Office of Audits has the mission to conduct audits of loans, loan guarantees, and
other investments made by Treasury under any program established by Treasury under Division
A of the CARES Act and to perform audits of the management by Treasury of programs
established under Division A of the CARES Act. The Office of Audits operates under the
authorities, duties, and responsibilities of Sections 4 and 6 of the Inspector General Act of
1978.89 These duties include making recommendations to agency leadership to promote
economy and efficiency in agency administration, prevent and detect fraud and abuse, and
facilitate the identification and prosecution of participants in fraud or abuse. Audits, reviews,
and other services will be performed in accordance with the Generally Accepted Government
Auditing Standards (GAGAS) and the Council of Inspector General on Integrity and Efficiency
(CIGIE) Quality Standards for Inspection and Evaluation, as appropriate.90 The Office of Audits
will work in close partnership with the other members of the SIGPR team, the Pandemic
Response Accountability Committee (PRAC), other Offices of Inspector General, and other
entities of the Federal Government as necessary to meet its statutory mission.
Staffing and Recruitment Efforts. The Office of Audits is currently staffed with an Assistant
Inspector General for Auditing (AIGA), who started on July 5, 2020, and one staff member who
reported for duty on September 28, 2020.
In August, the Office of Audits began the recruitment process to build a diverse organization. In
mid-August, the Office of Audits initiated recruitment actions for two non-audit positions; one
action was successfully completed, and one action is currently in process. On August 11, 2020,
we requested position descriptions (PDs) for GS-511 Auditors from Treasury’s Administrative
Resource Center. We received non-supervisory PDs on August 20, and we received supervisory
PDs for GS-511 grades 13, 14, and 15 on August 25. On August 28, the Office of Audits initiated
its first two recruitment actions for Supervisory GS-511 auditor positions; both actions are
currently in process.
With one staff member reporting for duty and the remaining three pending hires expected to
report in October, the Office of Audits is beginning the process of developing the operational
policies and procedures that are necessary under GAGAS, CIGIE, and other professional
standards to operate a fully functioning office of audits. The Office of Audits is also beginning
the process of developing an Audit Plan to identify projects that represent the highest priorities
89 See CARES Act § 4018(c)(3).
90 Quality Standards for Inspection and Evaluation, Council of the Inspectors General on Integrity and Efficiency
(2012), available at https://www.ignet.gov/sites/default/files/files/iestds12.pdf.
SIGPR OFFICES AND ACTIVITIES
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
43
for assessing the relevant financial-assistance programs and any other programs established
under Division A of the CARES Act that are managed or funded by Treasury.
In addition, the Office of Audits is in the early stages of recruiting staff to assemble the first
audit team. The office expects these staff members to be on board during the first quarter of FY
2021; and the timing of these recruitment actions should coincide with the establishment of
our Audit Policy, Procedures, and Audit Plan. The office will assess additional staffing needs on
an ongoing basis, taking into consideration budget resources and the demands of SIGPR’s
workload.
Investigations
The Office of Investigations (OI) continues to be SIGPR’s primary recipient for allegations of
improper or illegal activity relating to the issuance and administration of CARES Act funds. OI,
however, remains staffed with only an Assistant Inspector General for Investigation (AIGI), who
was hired on July 5, 2020, because hiring mission-critical Special Agents (SAs) has been
constrained by a cumbersome hiring process.91
As SIGPR noted in its initial report,92 the CARES Act incorporates the traditional law-
enforcement powers for SAs contained in Section 6 of the Inspector General Act of 1978 (the
“IG Act” or “Section 6”), specifically the authority to carry firearms, make arrests, and execute
warrants. SIGPR SAs are thus authorized to perform their duties with the same law-
enforcement powers as SAs in the other major Offices of Inspector General. In doing so, SIGPR
SAs will comply with Section 6 and the Attorney General Guidelines for Office of Inspector
General with Statutory Law Enforcement Authority.93
SIGPR’s most recent hiring challenge came on August 24, 2020, when Treasury Human
Resources asked SIGPR to submit documentation seeking Assistant Secretary for Management
approval of coverage for its Special Agent positions under the special law enforcement
retirement provisions as generally required under Treasury Order 102-01. This request
apparently resulted in some initial confusion between SIGPR’s statutory authority to establish
law enforcement positions and the Department’s authority to determine coverage under the
special law enforcement retirement provisions. From SIGPR’s perspective, these issues are
functionally inseparable. Treasury Human Resources initially failed to grant SIGPR’s request for
an exception under Treasury Order 102-01, effectively preventing SIGPR from establishing and
filling law enforcement positions.
91 As noted in the Recommendations to Congress, see infra, SIGPR again recommends Congress pass S.3751, a bill
to provide SIGPR critically needed hiring flexibility.
92 Initial Report, supra note 3, at 32.
93 Attorney General Guidelines for Offices of Inspector General with Statutory Law Enforcement Authority, Office
of the Attorney General (Dec. 8, 2003), available at
https://www.ignet.gov/sites/default/files/files/QAR%20INV%20AG%20Guidelines%20Statutory%20Law%20Enforc
ement%202003%20Appendix%20F.pdf.
SIGPR OFFICES AND ACTIVITIES
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SIGPR understands the Deputy Assistant Secretary for Human Resources has now coordinated
the exemption that SIGPR initially requested in late August. This exemption will allow SIGPR to
exercise its statutory authority to establish and fill law enforcement positions. With this issue
resolved, SIGPR is now moving forward with hiring special agents.
The OI staffing strategy is to hire SAs with experience investigating banking and other financial
crimes. OI will also target SAs that have graduated from the Federal Law Enforcement Training
Center or its equivalent, enabling OI to comply with the Attorney General Guidelines for Offices
of Inspector General with Statutory Law Enforcement Authority. A team of such graduates, with
banking and financial-crimes experience, will allow OI to become as operationally effective as
possible in the quickest possible manner.
Despite administrative headwinds, OI has initiated 21 preliminary investigations into allegations
of improper activity. Of the 21 investigations, 14 were reported to the SIGPR from sources
outside the office. Of those, seven were referred to other OIGs with proper jurisdiction, four
were closed due to insufficient information to initiate investigative activity, and three remain
under further review. One of the three investigations currently under review is being worked
jointly with a partner United States Attorney’s office. And to avoid relying exclusively on
external reports concerning possible misconduct or improper use of CARES Act funds, OI has
initiated seven proactive reviews—in partnership with other SIGPR components—of loan
applications submitted in connection with the Secretary’s direct lending program under CARES
Act § 4003.
The receipt, assessment, management and documentation of reported allegations, along with
documenting investigative activity, are critical to complying with the legal requirements and
professional standards applicable to all federal law-enforcement offices. For these reasons, and
to be good stewards of U.S. tax dollars, the SIGPR OI has elected to utilize the SIGTARP OI
automated Case Management System (CMS). The SIGTARP CMS was designed to satisfy both
the Attorney General Guidelines for Offices of Inspector General with Statutory Law
Enforcement Authority and the CIGIE Investigative Standards. Versions of SIGTARP’s CMS have
been used successfully throughout the federal government for over ten years. With SIGTARP’s
assistance implementing the CMS, which will be hosted and managed by TIGTA, SIGPR
anticipates substantial savings on software and personnel costs as well as reduced operational
risk.
In coordination with the SIGPR Office of Data Analytics, Evaluations & Special Projects, the OI
has established a telephonic Hotline (202-927-7899) for whistleblowers and reports of fraud,
waste, and abuse. SIGPR’s new website (www.sigpr.gov) also features a link for processing
whistleblower complaints and reports of fraud. With these tools in place, OI anticipates a
significant influx of investigative leads.
SIGPR OFFICES AND ACTIVITIES
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Data Analytics, Evaluations & Special Projects
The Office of Data Analytics, Evaluations & Special Projects (DAESP) is working with OI to build
an efficient complaint-intake process to be included in the CMS, as described above.
With budgetary constraints at the forefront of strategic planning, SIGPR decided this reporting
cycle to restructure the Office of Data Analysis, Deconfliction, Integration, and Whistleblower
Protection (DADI) into a new office—the Office of Data Analytics, Evaluations & Special
Projects. Building a robust data center to support data analytics will fall under DAESP’s new
operational purview.
DAESP remains a staff of one (the Assistant Inspector General) due to continued hiring
challenges. Because DAESP owns responsibility for a wide range of issues and projects, the
office needs employees who can cover an array of assignments. Finding existing position
descriptions from Treasury that reflect this need has been difficult, however, and the process of
creating and receiving approval for new position descriptions would create yet an additional
layer of complexity and delay. At present, using Treasury’s existing position descriptions, DAESP
is actively recruiting a Chief Data Officer. Legislative support for critically needed hiring
flexibility would be greatly appreciated.94
DAESP will represent SIGPR on the Treasury Transition Council and will coordinate SIGPR’s
strategic planning session in October. DAESP will continue to work closely with SIGPR
leadership to seek remedies where fraud, abuse, and misconduct are substantiated; to develop
and organize risk analyses or studies of patterns and practices; and to make recommendations
to improve overall CARES Act operations. As stated above, DAESP will consult with OI on
SIGPR’s telephonic Hotline (202-927-7899) for whistleblowers and reports of fraud, waste, and
abuse.
Building Partnerships
SIGPR continues to be proactive in building partnerships with U.S. Attorney’s Offices, various
components within the Department of Justice (DOJ), the U.S. Marshal in the Eastern District of
Virginia, and other offices of Inspector General, among others. Frequent teleconferences with
senior officials at DOJ, and with others, have allowed SIGPR to focus in on how it can be most
effective at providing investigative and case-development support. Recently, SIGPR senior staff
had the opportunity to meet in person with United States Attorneys and others from the DOJ at
the annual conference for United States Attorneys. At the conference, IG Miller and senior staff
spoke to the White-Collar Crime Subcommittee and had the unique opportunity to host a later
brainstorming session with key United States Attorneys. SIGPR now has memoranda of
understanding with six United States Attorney’s Offices.
SIGPR also continues to build relationships with its fellow Treasury IGs: TIGTA, SIGTARP, and the
Treasury IG. SIGPR is dedicated to establishing regular lines of communication with these
94 As noted in the Recommendations to Congress, see infra, SIGPR again recommends Congress pass S.3751, a bill
to provide SIGPR critically needed hiring flexibility.
SIGPR OFFICES AND ACTIVITIES
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parties to ensure the offices operate efficiently within the Department of the Treasury. SIGPR
continues to participate in CIGIE and the PRAC.
One of SIGPR’s first partnerships was established with FinCEN, and that partnership continues
to bear fruit. And SIGPR is especially appreciative of its special relationship with the U.S. Patent
and Trademark Office, which, by providing office space, has been instrumental in enabling
SIGPR to pursue its mission.
SIGPR has also expanded its partnerships with and outreach to the private sector. For example,
SIGPR has arranged an information-sharing agreement with the Financial Industry Regulatory
Authority (FINRA), the government-authorized, not-for-profit organization that oversees U.S.
financial broker-dealers. SIGPR recently reached out to the American Bankers Association and
the Independent Community Bankers of America. Additionally, IG Miller was a featured speaker
in a Maryland Association of CPAs government contracts conference and will be addressing the
New York City Bar Association on October 1. These relationships will allow SIGPR to build a
network of sources to identify improper and illegal activity involving CARES Act funds.
SIGPR has become a member of the PRAC training subcommittee, the PRAC law enforcement
coordination subcommittee, and will soon join the PRAC data analytics/proactive measures
subcommittee. This is in addition to the subcommittees of which SIGPR is already a member—
for example, the Department of Justice COVID-19 Working Group and the Federal Bureau of
Investigation COVID-19 Fraud Working Group.
In close partnership with the Federal Reserve Board OIG, SIPGR staff have been briefed by the
Federal Reserve Bank of Boston on the operational details of the Main Street Lending Program.
SIGPR will soon be briefed by the Federal Reserve Bank of New York on the various CARES Act
programs being administered through their Bank. These briefings help SIGPR to better
understand the processes in place for administering funds and conducting transactions under
CARES Act-authorized programs.
Additionally, SIGPR has been active with various committees to maintain constant deconfliction
among oversight bodies to include:
• PRAC weekly website working group;
• CIGIE and PRAC leadership meetings;
• PRAC data sharing working group;
• CIGIE Inspections & Evaluations subcommittee;
• Chief Data Officer Treasury, TIGTA, SIGTARP and SIGPR OIGs sub-group;
and
• Whistleblower Protection Coordinators working group.
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SIGPR FINDINGS AND
REPORTABLE DEVELOPMENTS
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
48
The CARES Act expressly requires SIGPR to include in its regular reports to Congress “a detailed
statement of all loans, loan guarantees, other transactions, obligations, expenditures, and
revenues associated with any program established by the Secretary under section 4003, as well
as the information collected under subsection (c)(1).”95 Accordingly, below is an explanation of
what SIGPR understands to be the categories of loans and other investments96 made to date by
the Secretary under CARES Act § 4003, including, where applicable and known, a summary
listing of the loans and investments made under each category and the eligible businesses to
whom loans were made.
Direct Loans
Introduction
CARES Act § 4003(a) authorizes the Secretary “to make loans, loan guarantees, and other
investments in support of eligible businesses, States, and municipalities that do not, in the
aggregate, exceed $500,000,000,000.” The CARES Act further categorizes these loans and
investments into four areas. The first three, codified in paragraphs 4003(b)(1)–(3), cover loans
and loan guarantees to passenger air carriers and related businesses ($25 billion), cargo air
carriers ($4 billion), and businesses critical to maintaining national security ($17 billion).97 The
final area, codified in paragraph 4003(b)(4), authorizes the Secretary to invest in the Federal
Reserve’s various liquidity programs established under Section 13(3) of the Federal Reserve Act
($454 billion).
On March 30, 2020, Treasury first announced its guidelines for businesses interested in applying
for loans under CARES Act § 4003(b)(1)–(3).98 Those guidelines incorporate several mandatory
loan terms and conditions from the CARES Act, with many designed to protect American
taxpayers. Before making each loan, the Treasury must determine, or the borrower must agree,
that:
• Unavailable Credit Elsewhere. Credit is not otherwise “reasonably available” for the
borrower at the time of the loan, § 4003(c)(2)(A);
95 CARES Act § 4018(f)(1)(B).
96 Treasury has not established a program for “loan guarantees” under CARES Act § 4003.
97 Treasury has posted on its website the contracts it has entered into in connection with the administration of
loans under section 4003(b)(1), (2), and (3). See Other Program, U.S. Dep’t Treasury (last visited Sept. 25, 2020),
https://home.treasury.gov/data/other-programs.
98 Procedures and Minimum Requirements for Loans to Air Carriers and Eligible Businesses and National Security
Businesses under Division A, Title IV, Subtitle A of the Coronavirus Aid, Relief, and Economic Security Act, U.S.
Dep’t Treasury (Mar. 30, 2020),
https://home.treasury.gov/system/files/136/Procedures%20and%20Minimum%20Requirements%20for%20Loans.
pdf.
SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY | QUARTERLY REPORT TO CONGRESS
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• Prudent Borrowing. The loan is being “prudently incurred” by the borrower,
§ 4003(c)(2)(B);
• Sufficient Security or Rate. The loan is “sufficiently secured” or “made at a rate” that
both “reflects the risk of the loan” and, “to the extent practicable, not less than an
interest rate based on market conditions for comparable obligations prevalent prior
to the outbreak” of COVID-19, § 4003(c)(2)(C);
• Term. The term of the loan must be “as short as practicable and in any case not longer
than 5 years,” § 4003(c)(2)(D);
• No Purchases of Borrower’s Stock. Until a date 12 months after the loan has been
repaid, neither the borrower nor any affiliated person or business may purchase the
borrower’s (or any parent company’s) stock that is listed on a national securities
exchange, unless required by a preexisting contractual obligation, § 4003(c)(2)(E);
• No Dividends. Until a date 12 months after the loan has been repaid, the borrower
may not pay a dividend or other capital distribution on its common stock,
§ 4003(c)(2)(F);
• Maintain Employment Levels. The borrower, until September 30, 2020, “shall
maintain its employment levels as of March 24, 2020, to the extent practicable, and
in any case shall not reduce its employment levels by more than 10 percent of the
levels on such date,” § 4003(c)(2)(G);
• U.S. Business. The borrower certifies “that it is created or organized in the United
States or under the laws of the United States and has significant operations in and a
majority of its employees based in the United States,” § 4003(c)(2)(H);
• Covered Losses. The borrower “must have incurred or is expected to incur covered
losses such that the continued operations of the business are jeopardized, as
determined by the Secretary,” § 4003(c)(2)(I);
• Equity Interest or Senior Debt Provided to the Government. The Treasury must “receive
a warrant or equity interest” in the borrower if the borrower “has issued securities
that are traded on a national securities exchange”; otherwise, the Treasury must
“receive a warrant or equity interest” in the borrower or “a senior debt instrument”
from the borrower. Issuance of the warrant, equity, or debt “shall be designed to
provide for a reasonable participation by the Secretary, for the benefit of taxpayers,
in equity appreciation in the case of a warrant or other equity interest, or a reasonable
interest rate premium, in the case of a debt instrument,” § 4003(d)(1)–(2);
• No Loan Forgiveness. The principal amount of any loan cannot be reduced through
loan forgiveness, § 4003(d)(3);
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• Limitation on Employee Compensation. CARES Act § 4004 requires a borrower to limit
compensation for certain employees during the period beginning on the date the loan
agreement is executed and ending one year after the loan is repaid, as follows:
o No officer or employee of the borrower “whose total compensation exceeded
$425,000 in calendar year 2019,” may receive annual “total compensation
which exceeds” the amount the officer or employee received in calendar year
2019, and such officer or employee shall not receive “severance pay or other
benefits upon termination of employment” with the borrower “which exceeds
twice the maximum total compensation received by the officer or employee
from the eligible business in calendar year 2019”;
o No officer or employee of the borrower “whose total compensation exceeded
$3,000,000 in calendar year 2019,” may receive “total compensation in excess
of the sum of . . . $3,000,000” and “50 percent of the excess over $3,000,000
of the total compensation received by the officer or employee from the
eligible business in calendar year 2019.”
• Continuation of Air Service. If the borrower is an air carrier, it must maintain scheduled
air services deemed necessary by the Secretary of Transportation to ensure service to
any location served by the borrower before March 1, 2020, § 4005; and
• Conflicts of Interest. Direct loans, like all transactions described in CARES Act § 4003,
may not be made to “covered entities” under the CARES Act’s conflict of interest
provision in section 4019. The provision defines a “covered entity” as one where the
President, Vice President, head of an Executive Department, member of Congress, or
certain family members hold 20% or more of any class of equity interest in the entity
receiving the loan or involved in the § 4003 transaction.
Air Carrier Loan Program (ALP)
CARES Act § 4003(b)(1)–(2) allocates $25 billion for loans and loan guarantees to passenger air
carriers, aviation-maintenance facilities certified under 14 C.F.R. Part 145, and air-
transportation ticket agents, plus $4 billion for cargo air carriers. On July 2, 2020, Treasury
announced that it had signed letters of intent outlining basic loan terms with five major airlines:
American Airlines, Frontier Airlines, Hawaiian Airlines, Sky West Airlines, and Spirit Airlines.99
On July 7, 2020, the Treasury announced that Alaska Airlines, Delta Air Lines, JetBlue Airways,
United Airlines, and Southwest Airlines likewise signed letters of intent.100
99 Press Release, Treasury and Five Major Airlines Agree on Loan Terms, U.S. Dep’t Treasury (July 2, 2020),
https://home.treasury.gov/news/press-releases/sm1050.
100 Press Release, Statement from Secretary Steven T. Mnuchin on CARES Act Loans to Major Airlines, U.S. Dep’t
Treasury (July 7, 2020), https://home.treasury.gov/news/press-releases/sm1054.
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On September 25, 2020, Treasury finalized loan agreements with American Airlines, Inc., and
Hawaiian Airlines, Inc. On September 29, 2020, Treasury officially announced its loans to those
two airlines and five others, for a total of seven.101 As of the time of the finalization of this
report, however, Treasury had only posted loan details for the two loans to American Airlines,
Inc., and Hawaiian Airlines, Inc.102
Because SIGPR is not afforded an opportunity to fully analyze the activity of a calendar quarter
before its quarterly report is due to Congress, SIGPR will provide further detail concerning these
loans in an appendix to its next quarterly report.103
The following table summarizes the 4003(b)(1) loans to date.
Recipient
Loan Date
Maturity
Date
Initial Principal
Loan
Amount104
Total Anticipated
Principal Loan
Amount
Interest and Fees
Accrued as of
September 25,
2020
American
Airlines, Inc
9/25/2020
6/30/2025
$5,477,000,000
$7,500,000,000105
Unknown
Hawaiian
Airlines, Inc.
9/25/2020
6/30/2024
$420,000,000
$622,000,000106
Unknown
Businesses Critical to National Security
CARES Act § 4003(b)(3) allocates up to $17 billion for loans and loan guarantees to “businesses
critical to maintaining national security.” The CARES Act does not define the term “businesses
critical to maintaining national security”; however, Treasury established criteria for making this
determination in its Frequently Asked Questions guidance issued on April 10, 2020:
101 See Press Release, Treasury Concludes Loans to Seven Major Airlines, Supports Additional Relief for Aviation
Industry Workers, U.S. Dep’t Treasury (Sept. 29, 2020), https://home.treasury.gov/news/press-releases/sm1140.
102 Loans to Air Carriers, Eligible Businesses, and National Security Businesses, U.S. Dep’t Treasury (last visited Sept.
28, 200), https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/loans-to-air-
carriers-eligible-businesses-and-national-security-businesses.
103 See infra, Recommendations to Congress.
104 Treasury reports that these loan amounts “may be increased, subject to certain conditions and satisfactory
documentation.” Loans to Air Carriers, supra note 103 n. 5, 6.
105 See Transaction Summary for American Airlines, U.S. Dep’t Treasury (last visited Sept. 28, 2020),
https://home.treasury.gov/system/files/136/American-Airlines-Summary.pdf.
106 See Transaction Summary for Hawaiian Airlines, U.S. Dep’t Treasury (last visited Sept. 28, 2020),
https://home.treasury.gov/system/files/136/Hawaiian-Airlines-Summary.pdf.
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A business critical to maintaining national security is one that, unless otherwise
approved as set forth below, is at the time of the business’s application:
(1) performing under a “DX”-priority rated contract or order under the
Defense Priorities and Allocations System regulations (15 C.F.R. part 700);
or
(2) operating under a valid Top Secret facility security clearance under
the National Industrial Security Program regulations (32 C.F.R. part 2004).
Applicants that do not satisfy either of these two criteria may be considered for
loans if, based on a recommendation and certification by the Secretary of
Defense or the Director of National Intelligence that the applicant business is
critical to maintaining national security, the Secretary of the Treasury determines
that the applicant business is critical to maintaining national security.107
The following table summarizes the sole 4003(b)(3) loan to date.108 Further detail concerning
this loan is provided in Appendix C.
Recipient
Loan Date
Maturity Date
Maximum
Potential Principal
Loan Amount
Interest and
Fees Accrued as
of July 24, 2020
YRC Worldwide, Inc
7/8/2020
9/30/2024
$700,000,000
$572, 000
Other Investments Under Section 4003
Introduction
CARES Act § 4004(b)(4) allocates at least $454 billion for “loans and loan guarantees to, and
other investments in, programs or facilities established by the Board of Governors of the
Federal Reserve System for the purpose of providing liquidity to the financial system that
supports lending to eligible business, States, or municipalities” by “purchasing obligations or
other interests” directly from the issuer or through secondary markets, and “making loans,
including loans or other advances secured by collateral.”
The Federal Reserve has established several liquidity programs, described in detail below, using
its emergency lending powers under Section 13(3) of the Federal Reserve Act, codified at 12
107 Q&A: Loans to Air Carriers and Eligible Businesses and National Security Businesses, U.S. Dep’t Treasury, at 1
(Apr. 10, 2020), https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-and-A-national-
security.pdf.
108 At SIGPR’s request, Treasury provided SIGPR access to nonpublic information on applicants to Treasury’s loan
programs under section 4003. SIGPR’s review of this nonpublic information revealed several application rejections
and withdrawals that SIGPR intends to investigate further to identify any patterns of conduct that may indicate
fraudulent or other illicit activity on the part of program applicants and participants.
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U.S.C. § 343(3). That provision, used extensively during the 2008 financial crises and amended
by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat.
1375, allows the Federal Reserve to lend money in “unusual and exigent circumstances” to
participants in “any program or facility with broad-based eligibility” who are “unable to secure
adequate credit accommodations from other banking institutions.” The Federal Reserve,
however, may not lend to insolvent entities, and its programs must be approved by the
Secretary of the Treasury.
Thus far, Treasury has invested $102.5 billion (of the allocated $454 billion) of CARES Act funds
to support the Federal Reserve’s liquidity programs. These programs include the Main Street
Lending Program, the Primary and Secondary Corporate Credit Facilities, the Municipal Liquidity
Facility, and the Term Asset-Backed Securities Loan Facility. For each program, Treasury invests
in a limited liability company, known as a special purpose vehicle (SPV), that is managed by one
of the individual Federal Reserve Banks.
Treasury’s investment of CARES Act funds in Federal Reserve SPVs is intended to protect the
Federal Reserve from losses. For each SPV into which the Secretary has agreed to invest, the
Secretary has entered into a formal “Investment Memorandum of Understanding” and is party
to an appropriate Limited Liability Company Agreement.109
The Federal Reserve Bank responsible for a given facility lends each SPV funds to be used in
specific transactions that support market liquidity. When structuring a given facility, the
Secretary and the Federal Reserve decide on a “gearing ratio” of Federal Reserve lending to
Treasury loss-absorbing capital. For each facility, application of the gearing ratio to the amount
invested by the Secretary thus reflects the agencies’ calculation of the amount of lending the
facility can support without a likelihood of capital losses beyond the amount invested by the
Secretary. The basic functioning of this “gearing ratio” is explained in the agencies’ responses to
questions from the Congressional Oversight Commission, which are disclosed in that
commission’s July 20, 2020 report.110
On its website, the Federal Reserve Board provides extensive information about its SPVs and
liquidity facilities, including detailed terms and conditions for loans and other transactions. The
109 See Main Street Lending Program Facility Agreements, Federal Reserve Bank of Boston (last visited Sept. 27,
2020), https://www.bostonfed.org/supervision-and-regulation/supervision/special-facilities/main-street-lending-
program/facility-agreements.aspx; Term Asset-Backed Securities Loan Facility, Federal Reserve Bank of New York
(last visited Sept. 27, 2020), https://www.newyorkfed.org/markets/term-asset-backed-securities-loan-facility;
Municipal Liquidity Facility, Federal Reserve Bank of New York (last visited Sept. 27, 2020),
https://www.newyorkfed.org/markets/municipal-liquidity-facility; Secondary Market Corporate Credit Facility,
Federal Reserve Bank of New York (last visited Sept. 27, 2020), https://www.newyorkfed.org/markets/secondary-
market-corporate-credit-facility (this MOU relates to both the Secondary Corporate Credit Facility and the Primary
Market Corporate Credit Facility).
110 The Third Report of the Congressional Oversight Commission, Treasury and Federal Reserve Answers to Tier 2
Questions, at 3 (July 20, 2020), https://coc.senate.gov/sites/default/files/2020-
08/20200720_Congressional_Oversight_Commission_3rd_Report.pdf.
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Federal Reserve Board also provides detailed information about each transaction in
spreadsheet form so that one can evaluate the individual loans made by a Section 13(3)
facility’s SPV.111 The Federal Reserve regularly updates this information and posts it under the
“Policy Tools” section of its website.112
The following table summarizes the total amount of CARES Act funds Treasury has previously
indicated it will invest in the SPVs.113
Recipient
Maximum Intended
Treasury Investment
Corporate Credit Facilities, LLC
$75,000,000,000
Municipal Liquidity Facility, LLC
$35,000,000,000
TALF II, LLC
$10,000,000,000
MS Facilities, LLC
$75,000,000,000
The following table summarizes the total amount of CARES Act funds Treasury had invested in
each SPVs as of September 24, 2020.114
Recipient
Treasury Investment as of
September 24, 2020
Corporate Credit Facilities, LLC
$37,508,197,253
Municipal Liquidity Facility, LLC
$17,500,000,000
TALF II, LLC
$10,000,000,000
MS Facilities, LLC
$37,506,756,581
The following table summarizes the portfolio holdings of the facilities as of the September 24,
2020, release of the Federal Reserve’s balance sheet.115 The balances reflect that the Secretary
has not yet made the maximum intended investment in each facility.
111 See, e.g., TALF Transaction-specific Disclosures, dated September 8, 2020, at
https://www.federalreserve.gov/monetarypolicy/talf.htm; Main Street Facilities Transaction-specific Disclosures,
dated September 8, 2020, at https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm; Secondary
Market Corporate Credit Facility Transaction-specific Disclosures, dated September 8, 2020, at
https://www.federalreserve.gov/monetarypolicy/smccf.htm; Municipal Liquidity Facility Transaction-specific
Disclosures, dated September 8, 2020, at https://www.federalreserve.gov/monetarypolicy/muni.htm.
112 Policy Tools, Board of Governors of the Federal Reserve System,
https://www.federalreserve.gov/monetarypolicy/policytools.htm.
113 The amounts listed are taken from the term sheets cited in the facility discussions below.
114 See Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of
the Federal Reserve Act (Sept. 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.
115 See Federal Reserve Statistical Release, H.4.1, Factors Affecting Reserve Balances,
https://www.federalreserve.gov/releases/H41/current/.
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Facility
Outstanding Amount of
Purchased Loan
Participations, Notes,
and Other Securities
Treasury
Contributions and
Other Assets
Total
Corporate Credit
Facilities, LLC
$12,911,000,000
$32,061,000,000
$44,972,000,000
Municipal Liquidity
Facility, LLC
$1,651,000,000
$14,895,000,000
$16,546,000,000
TALF II, LLC
$2,896,000,000
$8,535,000,000
$11,431,000,000
MS Facilities, LLC
$1,837,000,000
$37,518,000,000
$39,355,000,000
The following paragraphs describe the functioning of these facilities.
Corporate Credit Facilities, LLC
Corporate Credit Facilities, LLC, was formed by the Federal Reserve Bank of New York on April
31, 2020, to operate the Primary Market Corporate Credit Facility (PMCCF) and the Secondary
Market Corporate Credit Facility (SMCCF). Treasury has indicated it will invest up to $50 billion
to support the PMCCF and $25 billion to support the SMCCF;116 Treasury has invested $37.5
billion in the facilities to date.117 The facilities are structured to purchase up to $750 billion in
debt securities under these programs.
The PMCCF may purchase corporate bonds as the sole investor in a bond issuance. The facility
may also purchase syndicated loans or bonds at issuance. The bonds and loans must have a
maturity of four years or less, and the facility is limited to purchasing 25% of any syndicated
loan or bond. To be eligible for the program, an issuer must have an investment-grade credit
rating as of March 22, 2020. The facility will cease purchasing securities on December 31,
2020.118 As of August 31, 2020, the PMCCF had not closed any transactions.119
The SMCCF may purchase the following debt securities on the secondary market:
• Individual corporate bonds having a remaining maturity of five years or less that were
issued by businesses with investment-grade credit ratings as of March 22, 2020;
116 Term Sheet, Primary Market Corporate Credit Facility (July 28, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a9.pdf.
117 Periodic Report, supra note 115.
118 See id.; see also Press Release, Board of Governors of the Federal Reserve System (July 28, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200728a.htm (announcing “an extension
through December 31 of [the] lending facilities that were scheduled to expire on or around September 30”).
119 See Periodic Report, supra note 115.
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• Corporate bond exchange-traded funds (ETFs) whose objective is to provide broad
exposure to the U.S. corporate bond market, including exposure to both investment-
grade and high-yield bonds; and
• Individual corporate bonds with remaining maturity of five years or less that would create
a bond portfolio reflecting a broad market index of the U.S. corporate bond market.
The facility will cease purchasing securities on December 31, 2020.120 Detailed transaction
information for the SMCCF’s purchases is available on the Federal Reserve’s website.121
Municipal Liquidity Facility, LLC
Municipal Liquidity Facility, LLC, was formed by the Federal Reserve Bank of New York on May
1, 2020 to operate the Municipal Liquidity Facility (MLF). Treasury has indicated it will invest up
to $35 billion to support the Municipal Liquidity Facility;122 Treasury has invested $17.5 billion
in the facility to date.123 The facility is structured to offer up to $500 billion in support to state
and local governments and related entities.
The facility may purchase various revenue, tax, and bond anticipation notes issued by states,
the District of Columbia, large cities and counties, multi-state entities, and revenue bond
issuers. The notes must mature within three years of issuance, and the issuing entity generally
must have an investment-grade credit rating at the time of issuance. Issuers must use the
proceeds of the notes to alleviate cash flow problems resulting from reduced tax revenue,
increased expenses, or similar financial problems related to the COVID-19 pandemic. The
facility will cease purchasing notes on December 31, 2020.124 Transaction-specific details for the
MLF are available on the Federal Reserve’s website and updated regularly.125
As of September 8, 2020, the Federal Reserve reported only two transactions for the MLF. On
June 2, 2020, the MLF purchased a $1.2 billion note from the State of Illinois. The note matures
on June 5, 2021 and bears a rate of 3.36%.126 On August 18, 2020, the MLF purchased a $450
120 See Term Sheet, Secondary Market Corporate Credit Facility, Board of Governors of the Federal Reserve System
(June 15, 2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200615a1.pdf.
121 Secondary Market Corporate Credit Facility, Board of Governors of the Federal Reserve System (last visited
Sept. 27, 2020), https://www.federalreserve.gov/monetarypolicy/smccf.htm.
122 Term Sheet, Municipal Liquidity Facility, Board of Governors of the Federal Reserve System (Aug. 11, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200811a1.pdf.
123 Periodic Report, supra note 115.
124 See Term Sheet, Municipal Liquidity, supra note 123.
125 Policy Tools, Municipal Liquidity Facility, Board of Governors of the Federal Reserve System,
https://www.federalreserve.gov/monetarypolicy/muni.htm.
126 This rate was adjusted downward from 3.82% on August 27, 2020. See id.
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million note from Metropolitan Transit Authority (New York). The note matures on August 1,
2023, and bears a rate of 1.93%.
TALF II, LLC
TALF II, LLC, was formed by the Federal Reserve Bank of New York on April 13, 2020, to operate
the Term Asset-Backed Securities Facility, or TALF. (The original TALF, LLC was established
during the 2008 financial crisis.) Treasury has indicated it will invest up to $10 billion to support
TALF;127 Treasury has invested $10 billion in the facility to date.128 The facility is structured to
offer up to $100 billion in TALF lending.
TALF II, LLC, makes three-year, nonrecourse loans to borrowers who issue asset-backed
securities to serve as collateral for the loans. An asset-backed security is one composed of a
pool of debt obligations. The security’s value and performance depend on the value and
performance of the underlying pool of debt. Asset-backed securities eligible to serve as
collateral for a TALF loan include asset-backed securities based on auto loans and leases,
student loans, credit card receivables, floorplan loans, commercial mortgages, collateralized
loan obligations, and other common credit arrangements. TALF will accept as collateral only
those asset-backed securities with the highest investment-grade rating.129 TALF will cease
purchasing securities on December 31, 2020. Transaction-specific details for the TALF are
available on the Federal Reserve’s website and updated regularly.130
MS Facilities, LLC
MS Facilities, LLC, was formed by the Federal Reserve Bank of Boston on May 18, 2020 to
operate the Federal Reserve’s various facilities under the Main Street Lending Program (MSLP).
Treasury has indicated it will invest up to $75 billion to support the MSLP;131 Treasury has
invested $37.5 billion in the program’s single common SPV to date.132 The Main Street Lending
Program is structured to offer up to $600 billion in lending.
The MSLP supports private lending to medium- and small-sized businesses by purchasing 95%
participations in loans that conform to the terms of an MSLP program. The private lender
127 Term Sheet, Term Asset-Backed Securities Loan Facility, Board of Governors of the Federal Reserve System (July
28, 2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.
128 Periodic Report, supra note 115.
129 See Term Sheet, Term Asset-Backed Securities Loan Facility, Board of Governors of the Federal Reserve System
(July 28, 2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.
130 Policy Tools, Term Asset-Backed Loan Facility, Board of Governors of the Federal Reserve System,
https://www.federalreserve.gov/monetarypolicy/talf.htm.
131 Term Sheet, Main Street New Loan Facility, Board of Governors of the Federal Reserve System (July 28, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a3.pdf.
132 Periodic Report, supra note 114.
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retains a 5% participation in the loan. Loans may be secured or unsecured. The Federal Reserve
Bank of Boston has published the following graphic showing the operation of the MSLP133:
Transaction-specific details for the MSLP are available on the Federal Reserve’s website and
updated regularly.134 MSLP will cease purchasing loan participations on December 31, 2020.
Additional terms for each program apply as follows.
Loans to for-profit businesses
The MSLP offers three loan programs to for-profit business: Main Street New Loan Facility
(MSNLF), Main Street Priority Loan Facility (MSPLF), and Main Street Expanded Loan Facility
(MSELF). Each program has the following basic terms:
Loan Term
5 years
Employees and Revenue Either 15,000 or fewer employees, or 2019
revenue of $5 billion or less
133 The Federal Reserve’s Main Street Lending Program, Federal Reserve Bank of Boston,
https://www.bostonfed.org/supervision-and-regulation/supervision/special-facilities/main-street-lending-
program/main-street-lending-program-overview.aspx.
134 Policy Tools, Main Street Lending Program, Board of Governors of the Federal Reserve System,
https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm.
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Rate
Adjustable Rate of LIBOR (1 or 3 mo.) plus
3%
Interest Deferral
Deferred for 1 year
Principal Deferral
Deferred for 2 years, 15% due in each of
years 3 and 4, 70% due in year 5
The MSNLF and MSPLF differ in the size of loans available and in additional terms to
compensate for the greater exposure to loss in the larger MSPLF loans. Both programs offer
new loans, as opposed to expanding existing ones, which is the aim of the third facility
discussed below. The MSNLF has a minimum loan amount of $250,000. The maximum is the
lesser of $35 million or an amount that would not cause the borrower’s total outstanding and
undrawn debt to exceed four times the borrower’s 2019 earnings before adjusted interest,
taxes, depreciation, and amortization (EBITDA). The new loan need not be senior to the
borrower’s other debt, but it must not be contractually subordinated to the borrower’s other
debt.135
Like the MSNLF, the minimum MSPLF loan is $250,000. The maximum, however, is the lesser of
either $50 million or an amount that would not cause the borrower’s total outstanding and
undrawn debt to exceed six times the borrower’s 2019 adjusted EBITDA. The MSPLF
compensates for the higher loan amount by requiring the loan to be either pari-passu (on equal
footing) or senior in priority to the borrower’s other debts, with the exception of mortgage
debt. Unlike MSNLF loans, MSPLF loans have some level of repayment preference among the
borrower’s various debts in the event the borrower becomes insolvent.136
While MSNLF and MSPLF support new loans, MSELF loans allow businesses to expand existing
loans or revolving credit facilities. The MSELF portion of the refinancing must be a term loan
and must be senior or pari-passu in priority to the borrower’s other debt, with the exception of
mortgage debt. The minimum MSELF loan is $10 million. The maximum is the lesser of $300
million or an amount that would not cause the borrower’s total outstanding and undrawn debt
to exceed six times the borrower’s 2019 adjusted EBITDA.137
135 See Term Sheet, Main Street New Loan Facility, Board of Governors of the Federal Reserve System (June 8,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a1.pdf.
136 See Term Sheet, Main Street Priority Loan Facility, Board of Governors of the Federal Reserve System (June 8,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a2.pdf.
137 See Term Sheet, Main Street Existing Loan Facility, Board of Governors of the Federal Reserve System (June 8,
2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200608a3.pdf.
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Loans to nonprofit organizations
MSLP offers two loan programs to nonprofit organizations: Nonprofit Organization New Loan
Facility (NONLF) and Nonprofit Organization Expanded Loan Facility (NOELF). Like the MSLP
programs available to for-profit businesses, the MSLP programs available to nonprofit
organizations offer support for both new loans (NONLF) and expansion of existing loans
(NOELF). Also, like the MSLP loans to for-profit business, MSLP loans to nonprofit organizations
have some common terms:
Loan Term
5 years
Minimum
Employees
At least 10 employees
Employees and
Revenue
Either 15,000 or fewer employees, or 2019 revenue of $5 billion or less
Financial Conditions
•
Total non-donation revenues of at least 60% of expenses for 2017
through 2019
•
At least a 2% operating margin for 2019
•
At least 60 days current cash on hand
•
Ratio of cash, investments, and other repayment resources to
outstanding debt and certain other liabilities of greater than 55%
Endowment Cap
Less than $3 billion
Rate
Adjustable Rate of LIBOR (1 or 3 mo.) plus 3%
Interest Deferral
Deferred for 1 year
Principal Deferral
Deferred for 2 years, 15% due in each of years 3 and 4, 70% due in year
5
The NONLF minimum loan amount is $250,000. The maximum loan amount is the lesser of $35
million or the borrower’s average quarterly revenue in 2019. The new loan need not be senior
to the borrower’s existing debt but may not be contractually subordinated to that debt.138
138 See Term Sheet, Nonprofit Organization New Loan Facility, Board of Governors of the Federal Reserve System
(July 17, 2020), https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200717a2.pdf.
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NOELF loans, like MSELF loans, allow borrowers to refinance existing loans or revolving credit
facilities. The NOELF portion of the refinancing must be a term loan and must be senior or pari-
passu in priority to the borrower’s other debt, with the exception of mortgage debt. The
minimum NOELF loan is $10 million. The maximum is the lesser of $300 million or the
borrower’s average quarterly revenue in 2019.139
139 See Term Sheet, Nonprofit Organization Existing Loan Facility, Board of Governors of the Federal Reserve
System (July 17, 2020),
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200717a1.pdf.
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RECOMMENDATIONS
RECOMMENDATIONS
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Recommendations to Congress
SIGPR Quarterly Report Schedule
Under Section 4018(f) of the CARES Act, SIGPR must submit a report to Congress every
“calendar quarter” that “summariz[es] the activities of the Special Inspector General during the
3-month period ending on the date on which the Special Inspector General submits the report.”
CARES Act § 4018(f)(1)(A). Consistent with the requirements of Section 4018(f), SIGPR is
submitting this report on September 30, 2020—the end of the third “calendar quarter.”
Most other federal inspectors general, however, are authorized to issue their reports 30 to 45
days after their reporting period ends. This additional time between the conclusion of a
reporting period and the date of submission provides an adequate opportunity to analyze and
compile information collected during the applicable reporting period, ensuring completeness
and accuracy for Congress.
The requirement for SIGPR to submit a report on the day the reporting period ends is
unworkable. As SIGPR is preparing to submit this report, Treasury is announcing new loans to
major airlines. Yet SIGPR has no time to analyze or even include meaningful data on these new
loans. As it stands, SIGPR must end its data collection and analysis approximately 15 days prior
to the conclusion of the reporting period to meet its statutory submission deadline.
Providing SIGPR additional time to develop and issue its quarterly report would ensure the
completeness of SIGPR’s quarterly data and provide Congress a more accurate picture of the
quarter’s activity.
Recommendation: SIGPR recommends that Congress amend the CARES Act, or otherwise
agree, to allow SIGPR to submit its quarterly reports to Congress no later than 30 days after the
end of a calendar quarter. This would accord with the practice of other inspectors general that
produce statutorily required reports. Without objection, SIGPR plans to issue its next quarterly
report by January 31, 2021.
Hiring Authority
As detailed above, see infra SIGPR Offices and Activities, SIGPR has faced significant headwinds
in attempting to staff up quickly so that the office can turn its collective focus to finding and
exposing fraud, waste, and abuse under the CARES Act. While the office has worked diligently
to meet its statutory mandates with a limited roster, additional hiring authority and flexibility
would provide a tremendous boost to the office’s ability to conduct critically needed oversight.
Recommendation: SIGPR reiterates its recommendation that Congress take up S.3751, the
Special Inspector General for Pandemic Recovery Expedited Hiring Authorities Act of 2020,
sponsored by Senator Grassley. SIGPR thanks Senator Grassley for introducing the bill, as well
as Senators Hassan, Crapo, Ernst, and Booker for their co-sponsorship of it.
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APPENDICES
APPENDICES
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APPENDIX A
CARES Act, Division A, Title IV
SEC. 4018. SPECIAL INSPECTOR GENERAL FOR PANDEMIC RECOVERY.
(a) Office of Inspector General.--There is hereby established
within the Department of the Treasury the Office of the Special
Inspector General for Pandemic Recovery.
(b) Appointment of Inspector General; Removal.--
(1) In general.--The head of the Office of the Special
Inspector General for Pandemic Recovery shall be the Special
Inspector General for Pandemic Recovery (referred to in this
section as the ``Special Inspector General''), who shall be
appointed by the President, by and with the advice and consent of
the Senate.
(2) Nomination.--The nomination of the Special Inspector
General shall be made on the basis of integrity and demonstrated
ability in accounting, auditing, financial analysis, law,
management analysis, public administration, or investigations. The
nomination of an individual as Special Inspector General shall be
made as soon as practicable after any loan, loan guarantee, or
other investment is made under section 4003.
(3) Removal.--The Special Inspector General shall be removable
from office in accordance with the provisions of section 3(b) of
the Inspector General Act of 1978 (5 U.S.C. App.).
(4) Political activity.--For purposes of section 7324 of title
5, United States Code, the Special Inspector General shall not be
considered an employee who determines policies to be pursued by the
United States in the nationwide administration of Federal law.
(5) Basic pay.--The annual rate of basic pay of the Special
Inspector General shall be the annual rate of basic pay for an
Inspector General under section 3(e) of the Inspector General Act
of 1978 (5 U.S.C. App.).
(c) Duties.--
(1) In general.--It shall be the duty of the Special Inspector
General to, in accordance with section 4(b)(1) of the Inspector
General Act of 1978 (5 U.S.C. App.), conduct, supervise, and
coordinate audits and investigations of the making, purchase,
management, and sale of loans, loan guarantees, and other
investments made by the Secretary of the Treasury under any program
established by the Secretary under this Act, and the management by
the Secretary of any program established under this Act, including
by collecting and summarizing the following information:
(A) A description of the categories of the loans, loan
guarantees, and other investments made by the Secretary.
(B) A listing of the eligible businesses receiving loan,
loan guarantees, and other investments made under each category
described in subparagraph (A).
(C) An explanation of the reasons the Secretary determined
it to be appropriate to make each loan or loan guarantee under
this Act, including a justification of the price paid for, and
other financial terms associated with, the applicable
transaction.
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(D) A listing of, and detailed biographical information
with respect to, each person hired to manage or service each
loan, loan guarantee, or other investment made under section
4003.
(E) A current, as of the date on which the information is
collected, estimate of the total amount of each loan, loan
guarantee, and other investment made under this Act that is
outstanding, the amount of interest and fees accrued and
received with respect to each loan or loan guarantee, the total
amount of matured loans, the type and amount of collateral, if
any, and any losses or gains, if any, recorded or accrued for
each loan, loan guarantee, or other investment.
(2) Maintenance of systems.--The Special Inspector General
shall establish, maintain, and oversee such systems, procedures,
and controls as the Special Inspector General considers appropriate
to discharge the duties of the Special Inspector General under
paragraph (1).
(3) Additional duties and responsibilities.--In addition to the
duties described in paragraphs (1) and (2), the Special Inspector
General shall also have the duties and responsibilities of
inspectors general under the Inspector General Act of 1978 (5
U.S.C. App.).
(d) Powers and Authorities.--
(1) In general.--In carrying out the duties of the Special
Inspector General under subsection (c), the Special Inspector
General shall have the authorities provided in section 6 of the
Inspector General Act of 1978 (5 U.S.C. App.).
(2) Treatment of office.--The Office of the Special Inspector
General for Pandemic Recovery shall be considered to be an office
described in section 6(f)(3) of the Inspector General Act of 1978
(5 U.S.C. App.) and shall be exempt from an initial determination
by the Attorney General under section 6(f)(2) of that Act.
(e) Personnel, Facilities, and Other Resources.--
(1) Appointment of officers and employees.--The Special
Inspector General may select, appoint, and employ such officers and
employees as may be necessary for carrying out the duties of the
Special Inspector General, subject to the provisions of title 5,
United States Code, governing appointments in the competitive
service, and the provisions of chapter 51 and subchapter III of
chapter 53 of that title, relating to classification and General
Schedule pay rates.
(2) Experts and consultants.--The Special Inspector General may
obtain services as authorized under section 3109 of title 5, United
States Code, at daily rates not to exceed the equivalent rate
prescribed for grade GS-15 of the General Schedule by section 5332
of that title.
(3) Contracts.--The Special Inspector General may enter into
contracts and other arrangements for audits, studies, analyses, and
other services with public agencies and with private persons, and
make such payments as may be necessary to carry out the duties of
the Inspector General.
(4) Requests for information.--
(A) In general.--Upon request of the Special Inspector
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General for information or assistance from any department,
agency, or other entity of the Federal Government, the head of
that department, agency, or entity shall, to the extent
practicable and not in contravention of any existing law,
furnish that information or assistance to the Special Inspector
General, or an authorized designee.
(B) Refusal to provide requested information.--Whenever
information or assistance requested by the Special Inspector
General is, in the judgment of the Special Inspector General,
unreasonably refused or not provided, the Special Inspector
General shall report the circumstances to the appropriate
committees of Congress without delay.
(f) Reports.--
(1) Quarterly reports.--
(A) In general.--Not later than 60 days after the date on
which the Special Inspector General is confirmed, and once
every calendar quarter thereafter, the Special Inspector
General shall submit to the appropriate committees of Congress
a report summarizing the activities of the Special Inspector
General during the 3-month period ending on the date on which
the Special Inspector General submits the report.
(B) Contents.--Each report submitted under subparagraph (A)
shall include, for the period covered by the report, a detailed
statement of all loans, loan guarantees, other transactions,
obligations, expenditures, and revenues associated with any
program established by the Secretary under section 4003, as
well as the information collected under subsection (c)(1).
(2) Rule of construction.--Nothing in this subsection may be
construed to authorize the public disclosure of information that
is--
(A) specifically prohibited from disclosure by any other
provision of law;
(B) specifically required by Executive order to be
protected from disclosure in the interest of national defense
or national security or in the conduct of foreign affairs; or
(C) a part of an ongoing criminal investigation.
(g) Funding.--
(1) In general.--Of the amounts made available to the Secretary
under section 4027, $25,000,000 shall be made available to the
Special Inspector General to carry out this section.
(2) Availability.--The amounts made available to the Special
Inspector General under paragraph (1) shall remain available until
expended.
(h) Termination.--The Office of the Special Inspector General shall
terminate on the date 5 years after the enactment of this Act.
(i) Council of the Inspectors General on Integrity and
Efficiency.--The Special Inspector General shall be a member of the
Council of the Inspectors General on Integrity and Efficiency
established under section 11 of the Inspector General Act of 1978 (5
U.S.C. App.) until the date of termination of the Office of the Special
Inspector General.
(j) Corrective Responses to Audit Problems.--The Secretary shall--
(1) take action to address deficiencies identified by a report
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or investigation of the Special Inspector General; or
(2) with respect to a deficiency identified under paragraph
(1), certify to the Committee on Banking, Housing, and Urban
Affairs of the Senate, the Committee on Finance of the Senate, the
Committee on Financial Services of the House of Representatives,
and the Committee on Ways and Means of the House of Representatives
that no action is necessary or appropriate.
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APPENDIX B
Letter from Senator Elizabeth Warren
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Letter from Senator Kelly Loeffler, et al.
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APPENDIX C
LOANS ISSUED UNDER CARES ACT § 4003(b)(3)
YRC Worldwide, Inc.
Maximum
Potential
Principal Loan
Amount
Principal
Disbursed
Total Loan
Amount
Outstanding
Interest
and Fees
Accrued
as of Sept.
6, 2020
Interest
and Fees
Received
Gain/(Loss)
$700,000,000
$245,000,000
$246,145,000
$572,000
$572,000
$0
Collateral and Taxpayer Compensation
The Treasury is making the loan in two tranches: Tranche A for $300,000,000 and Tranche B for
$400,000,000. Both tranches are secured by a junior security interest in substantially all YRC
Worldwide’s assets and a senior security interest in undisbursed loan proceeds. Tranche B is
further secured by a senior security interest in certain truck and trailers belonging to YRC. The
loan matures on September 30, 2024.
In addition to these security interests, Treasury received YRC Worldwide, Inc. common stock
equal to 29.6% of the company’s fully diluted stock.140
Secretary’s Justification
On July 1, 2020, the Treasury issued a press release announcing this loan, and noting it was
made “based on a certification by the Secretary of Defense that YRC is critical to maintaining
national security.”141 The press release further noted that:
YRC is a leading provider of critical military transportation and other hauling
services to the U.S. government and provides 68% of less-than-truckload services
to the Department of Defense. This loan will enable YRC to maintain
approximately 30,000 trucking jobs and continue to support essential military
140 See Transaction Summary, available at https://home.treasury.gov/system/files/136/YRC-Transaction-
Summary.pdf, for additional details. The complete loan agreement is available at
https://home.treasury.gov/system/files/136/YRC-Documentation.pdf
141 Treasury to Provide Loan to YRC Worldwide, July 1, 2020, available at https://home.treasury.gov/news/press-
releases/sm1049
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supply chain operations and the transport of industrial, commercial, and retail
goods to more than 200,000 corporate customers across North America.
The press release also quoted the Secretary: “This loan will enable a critical vendor to the
Department of Defense to maintain significant employment while providing appropriate
compensation to taxpayers.”
SIGPR requested that Treasury provide the certification from the Department of Defense
certifying that YRC is an entity critical to national security, and Treasury agreed to do so. The
certification was included in SIGPR’s initial report to Congress.
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1