Full text
The Tenth Report of the Congressional Oversight Commission
February 26, 2021
Commission Members
U.S. Representative French Hill
Donna E. Shalala
U.S. Senator Pat Toomey
TABLE OF CONTENTS
Introduction
Main Street Lending Program
Treasury and Federal Reserve Recent Developments
Appendix A: Commission Letter to Federal Reserve Regarding the Main Street Lending
Program Loans
Appendix B: Federal Reserve’s Response to Commission Letter Regarding the Main Street
Lending Program Loans
Appendix C: Commission Letter to U.S. Transportation Command and Department of Defense
Regarding National Security Loan Program and Crowley Logistics
3
INTRODUCTION
This is the tenth report of the Congressional Oversight Commission (“Commission”)
created by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).1 The
Commission’s role is to conduct oversight of the implementation of Division A, Title IV,
Subtitle A of the CARES Act (“Subtitle A”) by the U.S. Department of the Treasury
(“Treasury”) and the Board of Governors of the Federal Reserve System (“Federal Reserve”).
Subtitle A provided $500 billion to the Treasury for lending and other investments “to provide
liquidity to eligible businesses, States, and municipalities related to losses incurred as a result of
coronavirus.”2
Of this amount, $46 billion was set aside for the Treasury itself to provide loans or loan
guarantees to certain types of companies. Up to $25 billion was available for passenger air
carriers, eligible businesses certified to inspect, repair, replace, or overhaul services, and ticket
agents. Up to $4 billion was available for cargo air carriers, and up to $17 billion was available for
businesses “critical to maintaining national security.”3 Any unused portions of this $46 billion,
and the remaining $454 billion, may be used to support emergency lending facilities established
by the Federal Reserve.
The CARES Act charges the Commission with submitting regular reports to Congress on:
• The Federal Reserve’s use of its authority under Subtitle A, including the use of
contracting authority and administration of the provisions of Subtitle A.
• The impact of loans, loan guarantees, and investments made under Subtitle A on the
financial well-being of the U.S. economy.
• The extent to which the information made available on transactions under Subtitle A has
contributed to market transparency.
• The effectiveness of loans, loan guarantees, and investments made under Subtitle A in
minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers.4
In its first report to Congress on May 18, 2020, the Commission stated that it is
responsible for answering two basic questions:
• What are the Treasury and the Federal Reserve doing with $500 billion of taxpayer
money?
1 CARES Act, Pub. L. No. 116-136, § 4020, 134 Stat. 281 (2020).
2 Id. § 4003(a).
3 Id. § 4003(b). In addition, Division A, Title IV, Subtitle B of the CARES Act (“Subtitle B”) authorized the Treasury
to provide up to $32 billion in financial assistance to passenger air carriers, cargo air carriers, and certain airline
industry contractors that must be exclusively used for the continuation of payment of employee wages, salaries, and
benefits. Of this amount, up to $25 billion is available for passenger air carriers; up to $4 billion is available for cargo
air carriers; and up to $3 billion is available for certain airline industry contractors. Subtitle B is not within the
jurisdiction of the Commission.
4 Id. § 4020.
4
• Who is that money helping?5
The emergency lending facilities established by the Federal Reserve that received CARES Act
funds are:
Primary Market Corporate Credit Facility (“PMCCF”) and Secondary Market
Corporate Credit Facility (“SMCCF”): Through a special purpose vehicle (“SPV”),
the PMCCF enabled the Federal Reserve to purchase newly issued corporate bonds
and portions of syndicated loans, and the SMCCF enabled the Federal Reserve to
purchase previously issued corporate bonds and exchange-traded funds (“ETFs”) that
invest in corporate bonds.6 The PMCCF never made any purchases during the period
it was operational.7 As of February 17, 2021, the SMCCF had an outstanding amount
of bond ETFs and individual corporate bond purchases of $14.1 billion.8
Main Street Lending Program (“MSLP”): The MSLP is comprised of five
facilities—three dedicated to for-profit businesses and two dedicated to non-profit
organizations. The Federal Reserve, through an SPV, acquired loans issued by
lenders to small and medium-sized businesses and non-profit organizations with up
to 15,000 employees or 2019 revenues of $5 billion or less. As of February 17,
2021, the Federal Reserve held $16.5 billion in loan participations purchased under
the MSLP.9
Municipal Liquidity Facility (“MLF”): Announced on April 9, 2020, the MLF enabled
the Federal Reserve, through a SPV, to purchase short-term notes issued by state and
local governments. As of February 17, 2021, the MLF had $6.2 billion in outstanding
purchases of municipal notes.10
5 Congressional Oversight Commission, Questions About the CARES Act’s $500 Billion Emergency Economic
Stabilization Funds, May 18, 2020, at 5, https://coc.senate.gov/sites/default/files/2020-
08/20200518_Congressional_Oversight_Committee_1st_Report.pdf.
6 Board of Governors of the Federal Reserve System, Primary Market Corporate Credit Facility Term Sheet, July 28,
2020, https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a9.pdf; Board of Governors
of the Federal Reserve System, Secondary Market Corporate Credit Facility Term Sheet, July 28, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a1.pdf.
7 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, Feb. 9, 2021,
https://www.federalreserve.gov/publications/files/pdcf-mmlf-cpff-pmccf-smccf-talf-mlf-ppplf-msnlf-mself-msplf-
nonlf-noelf-02-09-21.pdf.
8 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Feb. 18, 2021, at n.4,
https://www.federalreserve.gov/releases/h41/. The SPV is the Corporate Credit Facilities LLC.
9 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Feb. 18, 2021, at table 4,
https://www.federalreserve.gov/releases/h41/. The SPV for the MSLP is MS Facilities LLC.
10 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Feb. 18, 2021, at table 4,
https://www.federalreserve.gov/releases/h41/. The SPV for the MLF is Municipal Liquidity Facility LLC.
5
Term Asset-Backed Securities Loan Facility (“TALF”): The TALF enabled the
Federal Reserve, through an SPV, to make loans to U.S. companies secured by asset-
backed securities (“ABS”) backed by student loans, auto loans, credit card loans,
commercial mortgages, leveraged loans, loans guaranteed by the Small Business
Administration, and certain other assets.11 TALF had a total outstanding amount of
$3.4 billion in loans as of February 17, 2021.12
The direct lending programs managed by the Treasury that received CARES Act funds are:
The Treasury’s Loans for National Security Businesses: The Treasury also had $17
billion available to make loans to businesses critical to maintaining national security
under Subtitle A through December 31, 2020. The Treasury provided national security
loans to eleven businesses, totaling $735.9 million.13 One business, YRC Worldwide,
Inc. (“YRC”), accounted for 95% of the total outstanding.14
The Treasury’s Loans for the Airline Industry: In addition, the Treasury had available
$29 billion to make loans to the airline industry under Subtitle A until December 31,
2020, with $25 billion was available to passenger air carriers, including related
businesses, and $4 billion available to cargo air carriers.15 The Treasury provided
twenty-four such loans to companies the Treasury characterizes as airlines, ticket agents,
a repair station, and a cargo air carrier.16 Those loans total $21.2 billion.17
***
In this report, we provide an in-depth look at the MSLP. We also provide updates
regarding recent key actions taken by the Treasury and the Federal Reserve regarding each of
the above lending programs and facilities under Subtitle A, as well as updates regarding the
Commission’s oversight activities.
11 Board of Governors of the Federal Reserve, Term Asset-Backed Securities Loan Facility Term Sheet, July 28,
2020, https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.
12 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Feb. 18, 2021, at table 4,
https://www.federalreserve.gov/releases/h41/.
13 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited Jan. 21, 2021, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.
14 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited Jan. 21, 2021, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.
15 CARES Act § 4003. Related businesses are eligible businesses that are certified under part 145 of title 14, Code of
Federal Regulations, and approved to perform inspection, repair, replace, or overhaul services, and ticket agents (as
defined in Section 40102 of Title 49 of the United States Code).
16 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited Jan. 21, 2021, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses (see “Transaction Summary” of
each transaction for more details).
17 Id.
6
MAIN STREET LENDING PROGRAM
The total loan participations purchased by the MSLP while it was operational totaled
$16.6 billion,18 representing 2.8% of its original $600 billion lending capacity.19 As noted below,
the majority of transactions were participated via the two private sector new term loan facilities:
Main Street Priority Loan Facility (MSPLF) and the Main Street New Loan Facility (MSNLF).
At $4.37 million, the average loan size for the MSNLF is smaller than the overall average due in
part because these loans were available on an unsecured basis and these companies are generally
smaller than the borrowers who participated in the MSPLF. At 0.82% of total loans, only a
marginal amount of loans were participated through the Nonprofit Organization New Loan
Facility (NONLF) and zero loans were originated with the Nonprofit Organization Expanded
Loan Facility (NOELF).
Facility
Loan Amount
(in $ million)
Fed. Reserve
Participation
(in $ million)
Number of
Loans
Average Loan Size
(in $ million)
Main Street Priority Loan Facility
(MSPLF)
$12,917
$12,272
1,173
$11.01
Main Street New Loan Facility
(MSNLF)
2,695
2,560
616
4.37
Main Street Expanded Loan Facility
(MSELF)
1,805
1,714
26
69.41
Nonprofit Organization New Loan
Facility (NONLF)
42.0
39.9
15
2.80
Nonprofit Organization Expanded
Loan Facility (NOELF)
0.0
0.0
0
0.0
Total
$17,459
$16,586
1,830
$9.54
The MSLP saw an increase in loan activity leading to the program’s termination. As seen
in the chart below, nearly two-thirds of the $16.6 billion were transactions after November 30,
2020.20 President Rosengren attributed the December surge to both the announcement of the
18 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 8
2021, https://www.federalreserve.gov/publications/files/mslp-transaction-specific-disclosures-02-09-21.xlsx.
19 Board of Governors of the Federal Reserve, Federal Reserve takes additional actions to provide up to $2.3 trillion
in loans to support the economy, Apr. 9, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
20 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 8
2021, https://www.federalreserve.gov/publications/files/mslp-transaction-specific-disclosures-02-09-21.xlsx.
7
program’s impending closure and to “the stresses many medium-sized businesses were
experiencing at the end of 2020 as a result of the resurgence of COVID infections.”21 He further
stated that, in his view, “were certain tweaks permitted, [the MSLP] could have been more
impactful.”22
The majority of the 1,830 loans originated and purchased through the MSLP program
were for smaller-sized loans. While the average loan for the MSLP added to $9.5 million, the
median loan size was smaller at $4.0 million. This shows the program was reaching its intended
target audience of companies that were too small to access the capital markets. The below chart
shows the distribution of the 1,830 loans by size of principal amount.
21 Id.
22 Id. at 11.
115
10
0
20
40
60
80
100
120
140
Count of MSLP loans by date (in $ millions)
16.6
0.0
5.0
10.0
15.0
20.0
Cumulative MSLP principal amount of loan
participation by date (in $ billions)
8
Lenders from 48 states, the District of Columbia, and Puerto Rico, originated loans
through the MSLP. As seen below, the concentration of MSLP loans, in both total loan amount
and in number of loans, was highest among the biggest lenders to the program. Of the 317
lenders that participated, the top ten lenders, in terms of loan amount, accounted for 33% of the
total amount. These lenders also made up 34% of the number of loans originated. Conversely,
over 200 lenders originated three or fewer MSLP loans.
Lender Name
Total Loan
Amount
(in $ million)
Total Loan
Amount % of
Total
Number of
Loans
Number of
Loans % of
Total
City National Bank of Florida
$2,007.52
11.5%
371
20.3%
Vista Bank
775.7
4.4%
80
4.4%
Bank Of America, National Association
734.0
4.2%
12
0.7%
Spirit Of Texas Bank, SSB
432.4
2.5%
26
1.4%
CommerceWest Bank
389.7
2.2%
34
1.9%
B1BANK
327.8
1.9%
45
2.5%
Equity Bank
282.0
1.6%
18
1.0%
Wells Fargo Bank, National Association
279.8
1.6%
23
1.3%
Farmers & Merchants Bank, The
273.2
1.6%
16
0.9%
Enterprise Bank & Trust
255.8
1.5%
11
0.6%
Remaining 307 lenders
11,701.1
67%
1,194
65%
Total
$17,459
1,830
Borrowers for the MSLP came from 48 states, the District of Columbia, Puerto Rico, and
U.S. Virgin Islands. Borrowers were concentrated in certain states with about 50% of loan
22
300
719
314
293
170
8
4
0
200
400
600
800
Distribution of loan amounts by size (in $ million)
9
proceeds going to the top five states and 41.8% going to the top three states. As seen below, the
biggest state based on total borrower loan size was Texas at 17.8%, followed by California at
12.1%, and Florida at 12.0%. Conversely, the bottom ten states only amounted to 1.1% of the
MSLP loan proceeds and 2.5% of the total by loan count. This list consists of Montana,
Vermont, Alaska, South Carolina, Wyoming, North Dakota, Hawaii, New Mexico, Idaho, and
South Dakota. This list includes states that have suffered from drops in tourism and the energy
sectors, such as Hawaii, Alaska, and North Dakota. The Commission believes these states could
have benefited from the program, yet they combined for only 10 loans total.
Borrower State
Total Loan
Amount
(in $ million)
Total Loan
Amount % of
Total
Number of
Loans
Number of
Loans % of
Total
Texas
$3,106.8
17.8%
247
13.5%
California
2,106.4
12.1%
218
11.9%
Florida
2,093.1
12.0%
375
20.5%
New York
697.5
4.0%
56
3.1%
Missouri
653.4
3.7%
38
2.1%
Georgia
593.2
3.4%
29
1.6%
Oklahoma
539.4
3.1%
64
3.5%
Illinois
526.8
3.0%
46
2.5%
Massachusetts
478.5
2.7%
41
2.2%
Ohio
439.9
2.5%
36
2.0%
Remaining states, D.C.,
Puerto Rico, and U.S.
Virgin Islands
6,224.1
36%
680
37%
Total
$17,459
1,830
On January 26, 2021, the Commission sent a letter to the Federal Reserve requesting
additional information for the recently completed MSLP. The letter is attached as Appendix A.
The Commission followed up the letter with a staff-level conversation on February 5, 2021 to
ensure the Federal Reserve properly understood the nature of the Commission’s request. In
response, the Federal Reserve provided answers on February 16, 2021 which are summarized
below. Part of the response is confidential; however, the public information is attached as
Appendix B.
10
The Federal Reserve answered questions related to how it is monitoring credit quality for
purchased loan participations and the criteria under which the Federal Reserve determines how
to purchase loan participations from borrowers.
To monitor credit quality, the Federal Reserve Bank of Boston (“Boston Fed”) relies
heavily on borrower information provided to the Main Street Special Purpose Vehicle (“Main
Street SPV”). The terms of the Main Street Participation Agreement require the borrower to
provide certain financial information quarterly and annually as well as any material
developments to the Main Street SPV. The information is reviewed by the Boston Fed credit
team, with the assistance of a third-party vendor, where an internal credit score is developed that
informs how the portfolio is categorized and analyzed within the Federal Reserve. Furthermore,
this information is publicly disclosed weekly as part of the Federal Reserve’s Statistical Release
H.4.1 and periodic reports submitted to Congress.
As it relates to how the Federal Reserve determined which participations to purchase, the
Federal Reserve continually emphasized they did not perform any underwriting role or exercise
any substantive discretion over which loans should be accepted or rejected. If they passed the
Federal Reserve’s compliance review, the loan was accepted for purchase. To determine proper
compliance, the Federal Reserve relied on a thorough document review. The reviews were
conducted using two standard confidential loan review checklists. Over the life of the MSLP, the
Boston Fed adapted the review process to improve efficiency and processing time. As outlined
above, the volume of loans purchased increased significantly toward the end of the program. To
be able to review everything, the Boston Fed increased the resources and time devoted to
processing the loans. They also streamlined part of the process where applicable.
To conduct a full oversight analysis, the Commission requested copies of loan files from
a sample of loans purchased by the Federal Reserve. As an alternative to the actual sample loans,
the Federal Reserve provided a confidential distribution of the internal credit ratings given to the
entire MSLP portfolio as of December 31, 2020 and related credit checklists.
Overall, the Commission finds the Federal Reserve’s process for purchasing and
monitoring the MSLP portfolio sufficient. The Commission appreciates both the Federal Reserve
and the Boston Fed’s commitment to thorough due diligence and ensuring appropriate protocols
were in place to properly process the loans, especially towards the end of the program given the
uptick in loan volume. The Commission looks forward to working with the Federal Reserve to
evaluate the portfolio’s performance throughout the life of the loans and evaluating any credit
concerns or changes that may occur.
11
TREASURY AND FEDERAL RESERVE RECENT DEVELOPMENTS
As of January 8, 2021, the emergency lending programs created by the Treasury and
the Federal Reserve under Section 4003 of the CARES Act have ceased operations. On
December 21, 2020, Congress passed new COVID-relief legislation in the Consolidated
Appropriations Act, 2021, Pub. L. No. 115-260. In that legislation, Congress prohibited these
Federal Reserve’s CARES Act lending facilities from being restarted or replicated without
congressional approval and rescinded the remaining unobligated balance of the $500 billion
previously made available under Section 4003 of the CARES Act for emergency lending
programs.23
We summarize below the outstanding amounts of credit extended by each facility, and
other key developments.
Primary Market Corporate Credit Facility
The PMCCF ceased operations on December 31, 2020. The PMCCF did not engage
in any transactions during the period in which it was operational.24
Secondary Market Corporate Credit Facility
The SMCCF ceased operations on December 31, 2020. As of its closure, the SMCCF had
purchased individual corporate bonds from 557 different issuers, with the amortized cost of
outstanding individual bond holdings totaling $5.5 billion.25 As of February 8, 2021, the SMCCF
held $5.5 billion in purchases.26 The chart below summarizes the SMCCF’s 15 largest individual
bond holdings.27 As of February 8, the SMCCF also owns 16 bond ETFs with a market value of
$8.7 billion, including 7 high-yield bond ETFs with a market value of $1.2 billion.28
23 Consolidated Appropriations Act, 2021, Pub. L. No. 115-260, Division N, Title X, § 1003, 134 Stat. 1182.
24 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, Jan. 9, 2021,
https://www.federalreserve.gov/publications/files/pdcf-mmlf-cpff-pmccf-smccf-talf-mlf-ppplf-msnlf-mself-msplf-
nonlf-noelf-01-11-21.pdf#page=3.
25 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Jan. 11
2021, https://www.federalreserve.gov/publications/files/smccf-transaction-specific-disclosures-01-11-21.xlsx.
26 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 9
2021, https://www.federalreserve.gov/publications/files/smccf-transaction-specific-disclosures-02-09-21.xlsx.
27 Id. As reflected in the transaction-level disclosure, a number of the corporate bonds held by the Federal Reserve
have matured, been redeemed, or been exchanged.
28 Id.
12
Issuer
Sector
Amortized
Cost
($ Millions)
Percentage
SMCCF
Individual
Bond Holdings
AT&T Inc.
Communications
98.0
1.79%
Toyota Motor Credit Corp.
Consumer Cyclical
93.8
1.71%
Daimler Finance North America LLC Consumer Cyclical
92.8
1.69%
Verizon Communications Inc.
Communications
92.0
1.68%
Volkswagen Group of America
Finance LLC
Consumer Cyclical
89.5
1.63%
Apple Inc.
Technology
85.4
1.56%
Comcast Corp.
Communications
84.4
1.54%
BMW US Capital LLC
Consumer Cyclical
69.6
1.27%
Microsoft Corp.
Technology
67.3
1.23%
General Electric Co.
Capital Goods
65.9
1.20%
Ford Motor Credit Co. LLC
Consumer Cyclical
65.2
1.19%
AbbVie Inc.
Consumer Non-
Cyclical
58.3
1.06%
CVS Health Corp.
Consumer Non-
Cyclical
53.3
0.97%
BP Capital Markets America Inc.
Energy
53.1
0.97%
General Motors Financial Co. Inc.
Consumer Cyclical
50.2
0.91%
It is unclear whether and when the Federal Reserve will unwind its corporate bond
investments, particularly with respect to the ETFs. Chair Powell has testified that “[w]e are
generally a hold to maturity [investor]. It may be that we sell some back into the secondary
market down the road, but ultimately we’re [a] buy-and-hold type buyer.”29
29 House Financial Services Committee Hearing on Economic with Federal Reserve Chair Jerome Powell, 116th
Cong. (June 17, 2020) (Testimony of Chair Jerome Powell), available at
https://www.rev.com/blog/transcripts/house-financial-committee-hearing-transcript-on-economy-with-jerome-
13
Main Street Lending Program
The total loan participations purchased by the MSLP totaled $16.6 billion,30 representing
2.8% of its original $600 billion lending capacity.31 This report provides an in-depth look at the
MSLP.
Municipal Liquidity Facility
The MLF ceased operations on December 31, 2020. During its period of operation, the
MLF purchased a total of four notes from just two borrowers—State of Illinois and New York
City’s Metropolitan Transportation Authority (MTA). These notes totaled $6.6 billion,
representing 1% of the MLF’s original $500 billion lending capacity.32 As of February 17, 2021,
the Federal Reserve holds $6.2 billion of outstanding asset purchases.33
Term Asset-Backed Securities Loan Facility
The TALF ceased operations on December 31, 2020. During its period of operation, the
TALF made 224 loans totaling $4.4 billion to 20 investment funds.34 More than half of the
investors in these investment funds are foreign-based companies.35 TALF had a total outstanding
amount of $2.9 billion in loans as of February 17, 2021.36 The following chart shows the five
investment funds with the most in TALF outstanding.
powell.
30 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 8
2021, https://www.federalreserve.gov/publications/files/mslp-transaction-specific-disclosures-02-09-21.xlsx.
31 Board of Governors of the Federal Reserve, Federal Reserve takes additional actions to provide up to $2.3 trillion
in loans to support the economy, Apr. 9, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
32 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Jan. 11
2021, https://www.federalreserve.gov/publications/files/mlf-transaction-specific-disclosures-01-11-21.xlsx.
33 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Jan. 13, 2021, at table 4,
https://www.federalreserve.gov/releases/h41/. The SPV for the MLF is Municipal Liquidity Facility LLC.
34 Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 9
2021, https://www.federalreserve.gov/publications/files/talf-transaction-specific-disclosures-01-11-21.xlsx.
35 Id.
36 Board of Governors of the Federal Reserve System, Statistical Release H.4.1, Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Jan. 13, 2021, at table 4,
https://www.federalreserve.gov/releases/h41/.
14
Investment Fund
Loan Amount
(in $ million)
Percentage of
Total Program
Alta Fundamental Advisers SP LLC - Belstar-Alta Series 1
$1,967.3
67.1%
MacKay Shields TALF 2.0 Opportunities Master Fund LP
545.4
18.6%
Alta Fundamental Advisers SP LLC - Belstar-Alta Series 2
238.4
8.1%
Barings Paragon LLC
53.9
1.8%
Tortoise TALF Opportunities Fund, LP
50.8
1.7%
The investment funds use TALF loans to purchase securities backed by certain types of
consumer and business loans. The chart below illustrates the collateral sector breakdown of the
underlying loans that were purchased by investor funds using TALF loan proceeds.
Collateral Sector
Loan Amount
Outstanding
(in $ million)
Percentage of
Total Program
Small Business Administration Loans
$1,829.8
62.4%
Commercial Mortgage
486.6
16.6%
Leveraged Loan
450.3
15.4%
Private Student Loans
165.7
5.7%
Premium Finance
0.0
0.0%
Total
$2,932.4
15
The following chart shows the five ABS issuers with the most TALF-funded purchases.
Issuer
Sector
TALF Loan
Amount
(in $ million)
Percentage of
Total TALF
Program
Small Business Administration Pools
SBA–7(a) program
Small Business
$1,619.6
55.2%
Golub Capital Partners TALF 2020-1
LLC
Leveraged Loan
298.3
10.2%
Small Business Administration SBA–
504 program
Small Business
210.1
7.2%
Golub Capital Partners TALF 2020-2
LLC
Leveraged Loan
152.0
5.2%
Navient Private Education Refi Loan
Trust 2020-F
Private Student
Loans
132.6
4.5%
Treasury Loans for National Security Businesses
The national security loan program made 11 loans totaling $735.9 million.37 The
Commission recently sent a letter to the U.S. Transportation Command, a DOD functional
combatant command responsible for providing air, land, and sea transportation to meet national
security needs. The letter inquired about Crowley Logistics’ work as a prime contractor for the
DOD and Crowley’s relationship with their subcontractor, YRC. The letter is attached as
Appendix C.
Treasury Loans for the Airline Industry
The Treasury’s airline loan program made 24 loans totaling $12.4 billion.38 The
Commission submitted written questions to the Treasury regarding the airline loan program on
November 30, 2020 and the Commission received the Treasury’s written responses on January
15, 2021. We will provide details on the response in a future report.
37 U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited Jan. 15, 2021, https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-
industry/loans-to-air-carriers-eligible-businesses-and-national-security-businesses.
38 Id.
Appendix A:
Commission Letter to Federal Reserve Regarding the Main Street Lending
Program Loans
January 26, 2021
The Honorable Jerome H. Powell
Chairman
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551
The Honorable Eric S. Rosengren
President & Chief Executive Officer
Federal Reserve Bank of Boston
600 Atlantic Avenue
Boston, MA 02210
Dear Chairman Powell and President Rosengren:
Section 4020(b) of the CARES Act charges the Congressional Oversight Commission with the
duty to conduct oversight of both the Treasury Department and the Federal Reserve with respect to
Subtitle A, Division A programs.
Pursuant to Section 4020(e)(1), (4) of the Act, the Congressional Oversight Commission requests
that you provide copies of a sample of loan files related to the recently completed Main Street Lending
Program as outlined below. This sample represents a few of the program’s smallest loans, biggest loans,
median-sized loans, and loans from the program’s most frequent lender, National City Bank of Florida. In
addition, we would like you to discuss what your plan is for monitoring the performance of loans in the
Main Street Lending Program now that the program has completed.
Sample of Loans Requested by Borrower:
•
Red Rooster of Ridgefield, LLC, (Lender ABA# 221172241)
•
Tres Hombres Restaurants, Inc., (Lender ABA# 26009593)
•
Marquez Farms LLC (Lender ABA# 066004367)
•
Newport Property Construction, LTD. (Lender ABA# 075910921)
•
Fitness International, LLC (Lender ABA# 26009593)
•
BCD Travel USA LLC (Lender ABA# 26009593)
•
SB Investment Group, Inc. (Lender ABA# 066004367)
•
DeMayo Restaurant Group, Inc. (Lender ABA# 066004367)
•
Venevision Continental LLC (Lender ABA# 066004367)
The Commission is willing to accept the information on a confidential basis. The Commission
kindly asks that this information be provided by February 16, 2021 in order for it to be able to conduct
proper oversight in anticipation of the February report. Thank you for your attention to this matter.
Sincerely,
/s/
/s/
French Hill
Donna Shalala
Member of Congress
Commissioner
/s/
Pat Toomey
U.S. Senator
Appendix B:
Federal Reserve’s Response to Commission Letter Regarding the Main Street
Lending Program Loans
2/3/2021
1
Response to Request by Commission Staff for Information on Loan Monitoring
Request from Commission Staff: Provide information on how the Federal Reserve performs ongoing
monitoring of the credit quality of loan participations purchased as part of the Main Street Lending
Program (“Main Street” or “Program”) by the Main Street special purpose vehicle (“Main Street SPV”)
established by the Federal Reserve Bank of Boston (“FRBB”).
The FRBB monitors the ongoing credit quality of loan participations purchased by the Main
Street SPV through the receipt and review of borrower financial information provided by
Program lenders on a periodic basis and from time to time in the event of material
developments affecting the borrower. Such information is reviewed and evaluated by staff of
the FRBB and Main Street SPV vendors with expertise in credit risk and valuations, and is used
to generate views on expected portfolio performance and loss estimates necessary to inform
financial reporting in accordance with generally accepted accounting principles (“GAAP”).
1. Periodic Reporting of Borrower Financial Information
The FRBB’s ongoing credit monitoring program relies on periodic reporting by borrowers of
financial information throughout the life of each Main Street loan. During the active phase of
the Program, the Main Street SPV purchased 95% participation interests in over 1,800 loans
that were originated by banking organizations and credit unions using the lenders’ customary
underwriting practices. While lenders were expected to use their customary loan
documentation, Main Street loan agreements were required to incorporate a limited number of
Main Street-specific contractual provisions, including a financial reporting covenant1 obligating
the borrower to deliver to the lender certain financial information and calculations on an
annual and quarterly basis.2
Under the terms of the Main Street Participation Agreement,3 pursuant to which the Main
Street SPV has purchased each loan participation, a lender is obligated to pass on the Main
Street SPV borrower financial information provided by the borrower to the lender. In addition,
under the terms of the Main Street Servicing Agreement,4 the lender is obligated to input into
the Main Street portal required borrower financial data on a quarterly and annual basis, and to
1 For Main Street loans made under the Main Street Expanded Loan Facility and Nonprofit Organization
Expanded Loan Facility that are part of multi-lender credit facilities, the loan documentation must
include such a financial reporting covenant, unless it has a financial reporting covenant that was
negotiated in good faith prior to April 24, 2020.
2 All Main Street borrowers are required to provide specified data elements on a quarterly and annual
basis during the life of the loan. Please refer to Appendix B (Required Covenants in Loan
Documentation) and Appendix C (Required Financial Reporting) of the Main Street For-Profit Business
FAQs (last version available here) and the Main Street Non-Profit Organization FAQs (last version
available here) for more detail on each required financial data element.
3 The Main Street Participation Agreement consists of Standard Terms and conditions (last version
available here) and Transaction Specific Terms (last version available here)
4 The last version Main Street Servicing Agreement is available here.
FRB-CC-COC-000001
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2
make available copies of the credit agreement and related documents, including waivers,
amendments, modifications, supplements, and forbearances at the request of the Main Street
SPV.
2. Information Received Related to Material Developments
In addition to the required periodic submission of required financial information, the Main Street
SPV may become aware of information concerning the financial condition of a borrower in the
event of material changes. Examples include information the lender has received from the
borrower under the Main Street loan concerning the credit documents and rights in the loan
transferred to the Main Street SPV (e.g., default notices, prepayment notices, financial,
compliance and collateral reporting) or in instances where the lender is seeking the authorization
of the Main Street SPV to take certain actions concerning the loan (e.g., actions that may
materially change the rights of the SPV, including reduction in principal/interest, delay of
payments, change of pro rata sharing provisions, release of all or substantially all of the
collateral). Such information can further inform the FRBB’s ongoing credit monitoring.
3. Ongoing Evaluation of Financial Information
To monitor the Main Street portfolio on an ongoing basis, the financial information received by
the Main Street SPV is reviewed by a dedicated FRBB credit team, with the assistance of a third-
party vendor engaged to provide certain credit administration services. Among other
responsibilities, the credit administrator updates internal risk ratings assigned to each loan to
reflect the changing financial condition of the borrowers, using an internal credit-scoring model
approved by the FRBB’s Credit Committee for Main Street. This internal credit-scoring model
seeks to generate a credit rating for each borrower, taking into account the characteristics of
the borrower such as industry, profitability, and financial leverage. These scores are generally
calculated on a quarterly basis based upon collected borrower financial information and, when
relevant, information on principal and interest payment collections.5
The Main Street SPV utilizes these ratings, among other inputs, to produce a quarterly analysis
of the Allowance for Loan and Lease Losses (“ALLL”) on the portfolio. The allowance considers
relevant estimates of probability of default (“PD”), loss given default (“LGD”) and exposure at
default factors in light of credit ratings, and other loan characteristics (e.g. collateral positions).
Qualitative factors (including changes in economic and business conditions) are also assessed
so that loss rates (product of PD and LGD) appropriately reflect risks within the then-current
environment. This is reviewed, vetted, and approved by FRBB senior management and the
FRBB’s Executive Oversight Committee for Main Street, including a first level review by the
Credit Sub-committee for Main Street. Quarterly processes also include developing valuations
5 Under Main Street, principal payments are deferred for two years and interest payments are deferred
for one year (unpaid interest is capitalized).
FRB-CC-COC-000002
2/3/2021
3
based upon expected cash flows, with key inputs including credit ratings and estimated
discount factors.
4. Publication of Financial Information Concerning the Main Street SPV Loan
Participation Portfolio
Information on the aggregate amount of loan participations held by the Main Street SPV is
disclosed on the weekly Federal Reserve Statistical Release H.4.1., Factors Affecting Reserve
Balances, which is published weekly here. In particular, the table of “Maturity Distribution of
Securities, Loans, and Selected Other Assets and Liabilities” of the Reserve Banks (table 2)
shows the book value of loan participations held by the Main Street SPV, and the table of
“Principal Accounts of Credit Facilities LLCs” (table 4) shows the outstanding principal amount
of loans extended to the Main Street SPV and the outstanding amount of facility asset
purchases by the Main Street SPV, net of ALLL. This is in alignment with generally accepted
accounting principles and the inclusion of losses estimated based upon the Main Street
holdings, and does not indicate actual losses experienced by the Program. The Program has no
realized losses as of the time of this memo.
The estimated ALLL is updated on a quarterly basis and is reflected in the H.4.1 and the periodic
reports submitted by the Board to Congress regarding emergency facilities authorized under
section 13(3) of the Federal Reserve Act. As reported to Congress, the evaluation of loan
participations purchased by the Main Street SPV resulted in recording an ALLL in the amount of
$96 million as of September 30, 2020. This figure was estimated based upon the Main Street
SPV’s holdings as of September 30, 2020, and utilized a loss forecasting approach focused
primarily on those loans most likely to experience losses. The ALLL estimates do not indicate
actual losses experienced by the Program. The estimated ALLL for the Main Street SPV will be
updated on a quarterly basis going forward, using the processes described above.
FRB-CC-COC-000003
2/16/2021
1
Response to Request by Commission Staff for Information on Loan Monitoring
Request from Commission Staff: Provide information on the intake and review process used by
the Federal Reserve in making a determination as to whether the special purpose vehicle (“SPV”)
established by the Federal Reserve Bank of Boston (“FRBB”) would purchase a participation
interest in a loan submitted by an eligible lender to the Main Street Lending Program (“Main
Street” or “Program”).
As discussed, the Main Street Program relied – as a matter of its fundamental design – on
banking organizations and credit unions to originate and underwrite loans to Main Street
borrowers. Accordingly, the role performed by the SPV in accepting Program loans for
purchase was not an underwriting role and did not involve the exercise of any substantive
discretion over which loans should be accepted and which loans should be rejected. Rather,
the role performed by the SPV in reviewing submitted loans for acceptance was limited to
ensuring that such loans complied with publicly specified Program terms. All submitted loans
that passed that compliance check were accepted by the SPV for purchase.
Main Street lenders were instructed to use their customary underwriting practices when
evaluating eligible borrowers, and their customary loan documentation—adjusted only as
appropriate to reflect the requirements of the Program—to create a credit agreement between
the lender and borrower.1 In addition, borrowers and lenders were required to enter into a
series of Main Street-specific agreements and provide Program-specific certifications.2 As part
of the process of submitting each already underwritten loan for final SPV review to confirm
compliance with Program terms, lenders were required to submit the following documents,
completed and signed:
• the credit agreement between the lender and the borrower that documented the loan
and evidenced key terms, like payment schedule, interest rate, and events of default;3
• Borrower Certifications and Covenants for each loan;4
• an Assignment and Assumption and Co-Lender agreement, which would enable the
Main Street SPV to elevate its status from a participant to an assignee;5
• any financial information that the borrower provided to the lender, in the format in
which the borrower provided it;6 and
• if the loan was secured or guaranteed, the related security agreement or guaranty.
1 See Main Street for-profit and nonprofit frequently asked questions (“FAQs”), question I.4 and Appx A.
2 See Main Street for-profit and nonprofit FAQ L.9.
3 The credit agreement was required to reflect the terms set out in Appendix A of the Main Street for-profit and
nonprofit FAQs.
4 The Main Street Borrower Certifications and Covenants varied by facility, and can be found here.
5 The template Assignment and Assumption and Co-Lender Agreements can be found here.
6 See Main Street for-profit and nonprofit FAQ L.8.
FRB-CC-COC-000004
2/16/2021
2
In addition to the above documents, lenders completed and executed Lender Certifications and
Covenants, a Loan Participation Agreement, and a Servicing Agreement through the Main
Street Lender Portal for each loan.7
FAQ L.7 indicated that the Main Street SPV intended to purchase 95% participations in any loan
submitted to the SPV for purchase, provided that two conditions were met:
• the required documentation is complete and properly executed; and
• the required documentation evidences that the loan is consistent with the relevant
Main Street facility’s requirements.8
Accordingly, the screening process for Main Street loans focused on a review of the loan
documentation received to determine if it was (i) complete and properly executed and
(ii) consistent with the core Program requirements, as published in the relevant facility term
sheet and FAQs. The standard loan review process is described below, followed by a
description of the adjustments made during the course of the Program to improve its efficiency.
1. Document Review Process
Lenders were instructed to submit all of the specified loan paperwork, completed and signed,
through the Main Street Lender Portal.9 These reviews were conducted using two standard
loan review checklists:
• The Main Street Lending Program Document Diligence Checklist, a copy of which is
attached as Confidential Exhibit A, was completed by outside counsel or other legal
resources during the course of their review of each package of specified documents.
• The “CA Ops Test Plan,” a copy of which is attached as Confidential Exhibit B, was
completed for each loan by the Credit Administrator, Guidehouse/PwC.
The completed checklists were then provided to FRBB staff for review before any return
communications were made to the lender. FRBB staff met on a daily basis during the loan
intake period to discuss the results of these reviews and any findings that required the
judgment of the FRBB. Among the items reviewed were:
• whether the interest rate, maturity date, and payment schedule contained in the loan
documentation complied with Program terms;
• whether the limited number of Main Street-specific contractual provisions (e.g.,
required financial reporting covenants) were incorporated into the lender’s loan
documentation; and
7 The Main Street Lender Certifications and Covenants, which vary by facility, and the template Participation and
Servicing Agreements, can be found here.
8 See Main Street for-profit and nonprofit FAQ L.7.
9 See Main Street for-profit and nonprofit FAQ L.4.
FRB-CC-COC-000005
2/16/2021
3
• if the loan contained a cash collateral or reserve account, and whether such account
conformed with Program requirements.
After this SPV review of each loan submission, if problems were found in the loan review, the
lender was provided with a detailed e-mail, reviewed by FRBB Legal and operations staff,
identifying any exception matters and was permitted to resubmit the loan to address the issues
identified in the exception. The SPV did not reject any loans due to the borrower’s financial
condition or credit risk because the SPV’s review did not include any evaluation or judgment on
matters of underwriting. To underscore, those items were not reviewed by the SPV before
purchasing the loan, because as a matter of fundamental program design:
• the borrower’s credit risk would have been evaluated during the underwriting process
by the lender retaining 5% of the loan;
• lenders were required to submit completed certifications stating that the loan was in
compliance with Program requirements, including the debt-to-EBITDA test for maximum
loan size; and
• the Main Street portal conducted an automated check on whether the loan size was
permissible, under publicly stated Program terms, given the borrower’s outstanding
debt and EBITDA, as input by the lender.
2. Adaptations to the Review Process
During the course of the loan intake period, which commenced on July 6, 2020, and ended on
January 8, 2021, the FRBB took a series of steps to improve the efficiency of the loan review
process and, thereby reduce the loan review processing time, in cases where the FRBB
determined it was prudent to do so.
a. Demonstrated Track Record of Good Quality Documentation
In Fall 2020, the FRBB adopted an expedited and streamlined process for reviewing certain loan
submissions made by lenders that had demonstrated track records of submitting loan
documentation that was complete and properly executed, and evidenced that the loan is
consistent with the relevant Main Street facility’s requirements. This process was applied to
(i) single borrower loans (ii) for a principal amount of under $5 million (iii) submitted by lenders
that had consistently submitted loans for which no problems or exception matters were
identified in the loan review process.
The use of this process, including the triggers or thresholds for its use and the types of loans to
which it was applied, were approved by the FRBB’s Executive Oversight Committee for Main
Street. Prior to acceptance by the Main Street SPV, the loans subject to this process were
screened by the Credit Administrator to determine if they met the criteria for expedited review.
After being accepted, these loans were reviewed by the Credit Administrator in more detail
using a streamlined version of the CA Ops Test Plan. In light of the limited nature of the loan
FRB-CC-COC-000006
2/16/2021
4
document review process (i.e., ensuring that loans complied with publicly specified Program
terms) and the demonstrated track records of lenders, the streamlined test plan focused on
whether the Main Street-specific agreements and Program-specific certifications for borrowers
had been properly completed and executed, with exceptions escalated to FRBB staff to
determine what course of action, if any, should be taken to address such issues.
b. Meeting Increasing Loan Demand near Program Termination
By the end of November, Main Street had purchased 646 loan participations. In the time period
between December 1, 2020, and the Program’s termination on January 8, 2021, Main Street
purchased an additional 1,184 of loan participations, for a total of 1,830 purchased by the
Program overall.
To be in a position to be able to process the increased volume of submissions to Main Street in
this period, the FRBB increased staffing by bringing in additional trained legal and
risk/compliance professionals from the Board, the FRBB, and the FRBNY, and the Main Street
vendors also expanded the sizes of their teams considerably. The internal and external teams
increased their capacity by working evenings and weekends to meet demand.
In addition, the FRBB took several actions during the month of December to streamline its loan
review process in targeted ways presenting minimal additional risk. Under this streamlined
process, the review of certain items in the Document Diligence checklist (e.g., the completion of
certain non-signature fields in the template documents) was deferred until after the acceptance
of a loan. The FRBB first utilized the streamlined approach for loans less than $5 million, and as
loan submissions increased, the FRBB expanded its use of a streamlined process to loans up to
$50 million (excluding loans submitted under the Main Street Expanded Loan Facility). The use
of the streamlined approaches, including the triggers or thresholds for when to use them, the
types of loans to which they were applied, and the extent of the streamlining to undertake,
were approved by the FRBB’s Executive Oversight Committee for Main Street.
Since the termination of the facility on January 8, 2021, the Credit Administrator and FRBB staff
have undertaken a review of deferred items and are in the process of working with lenders to
make necessary corrections to any errors. The deferred items were generally those that could
be easily addressed on an ex-post basis, such as the completion of certain non-signature fields
in the Main Street form documentation.
FRB-CC-COC-000007
2/16/2021
5
Exhibits
Confidential Exhibit A - Main Street Lending Program Document Diligence Checklist
This document was used by legal vendors and Federal Reserve legal staff to evaluate a loan’s
compliance with Program terms. The Federal Reserve System requests confidential treatment
for this submission.
Confidential Exhibit B – CA Ops Test Plan
This document was completed by the Credit Administrator, Guidehouse/PwC to evaluate a
loan’s compliance with Program terms. Tab “3. Test Results” contains the key issues being
evaluated under the test plan, while Tabs 1-2 contain input fields and Tabs 5-6 were used to
organize feedback. The Federal Reserve System requests confidential treatment for this
submission.
FRB-CC-COC-000008
Appendix C:
Commission Letter to U.S. Transportation Command and Department of
Defense Regarding National Security Loan Program and Crowley Logistics
January 25, 2021
General Stephen R. Lyons
Commander
U.S. Transportation Command
Scott Air Force Base
Illinois, 62225
Dear General Lyons:
This letter continues the Congressional Oversight Commission’s (the “Commission”)
review of the U.S. Department of Treasury (the “Treasury”) loan provided to YRC Worldwide,
Inc. (“YRC”). As you may know, the Commission has been tasked with overseeing the $454
billion provided to the Treasury’s Exchange Stabilization Fund per the Coronavirus Aid, Relief
and Economic Security Act (CARES Act). Of those funds, $17 billion was designated to
businesses critical to maintaining national security of which YRC received $700 million. The
Department of Defense (the “DOD”) determined that YRC is critical to national security.
The Commission has been doing extensive oversight of the YRC loan as it believes the
loan may be hurtful to taxpayers. As part of that work, the Commission conducted a hearing with
Treasury and a teleconference briefing with DOD. It has also sent multiple letters and questions
to both agencies. As part of the DOD teleconference briefing with Undersecretary Ellen M. Lord,
the Commission received additional documentation including a copy of the Crowley Logistics
(“Crowley”) contract dated November 22, 2016 and a copy of the contract modification dated
August 1, 2020. These were accompanied by a performance work statement (“PWS”) for
Department of Defense Freight Transportation Services (“DFTS”) dated August 1, 2020. The
Commission acknowledges that these documents are for internal use only and not for public
dissemination.
In response to this additional documentation, the Commission has additional questions
and information it would like answered or provided as it relates to the work Crowley does as a
prime contractor for the DOD. Please note, the Commission has addressed this letter to
USTRANSCOM as it believes you are in the best position to provide the necessary information,
however, please consult with DOD as warranted to ensure the Commission receives the most
complete answers possible.
1. Correspondence between USTRANSCOM and Crowley
Undersecretary Lord told the Commission during her teleconference that DOD does not
oversee subcontractors and leaves that responsibility to the prime contractor. That same
sentiment is echoed in the PWS stating that “the Contractor shall manage its human and physical
resources, including its sub-contractors, to partner with DOD and its stakeholders.” Additionally,
Undersecretary Lord stated in her follow-up materials that USTRANSCOM contacted Crowley
regarding the anticipated effect of YRC ceasing LTL services.
Please summarize the extent of that correspondence and provide any documentation of
that correspondence including, but not limited, email correspondence with Crowley and the
DOD, memoranda, summary of all meetings and phone calls USTRANSCOM had with Crowley
and DOD and any corresponding documentation.
Additionally, in USTRANSCOM’s correspondence with Crowley, what did they say
would be the anticipated effect of ceasing YRC’s LTL services? Did USTRANSCOM ask
Crowley if YRC should be designated as critical to national security? If so, please provide the
justification Crowley provided.
2. Additional Documentation
As outlined, the PWS requires timely reporting of key metrics for each contractor and
requires contractor to “supply a scorecard of all required performance data to the government
program manager and the contracting officer and the contracting officer representative.”
Please provide copies of the metrics reported by Crowley for all subcontracted LTL
carriers, not just YRC, for 2018, 2019 and 2020. The reports should include but not be limited to
on time response, on time pick up, on time delivery, and any loss and damage claims.
Please also provide information related to the freight prices paid monthly for 2018, 2019,
and 2020, including total freight prices and average freight calls for all LTL shipments, not just
YRC. Please show present the data as cost per mile, cost per hundredweight, cost per pound, as
appropriate.
Thank you for your willingness to help the Congressional Oversight Commission. We
have appreciated the work and cooperation of the DOD with the Commission thus far and look
forward to a continued positive relationship.
Sincerely,
/s/
/s/
French Hill
Donna Shalala
Member of Congress
Commissioner
/s/
Pat Toomey
U.S. Senator
CC: Lloyd J. Austin III, Secretary of Defense