Highlights of GAO-24-106482: Federal Reserve Lending Programs: Status of Monitoring and Main Street Lending Program

Summary

Highlights page of GAO-24-106482, a December 2023 report to congressional committees on Federal Reserve lending programs and the Main Street Lending Program. The Board of Governors of the Federal Reserve System authorized 13 emergency lending facilities, nine of which received CARES Act funds under section 4003; of these nine, six had about $12 billion in outstanding assets and loans. Of that total, facilities under the Main Street Lending Program accounted for about $8.6 billion, or about 72 percent. GAO found that Federal Reserve Banks addressed almost all enhancement opportunities identified in five internal reports. The Main Street Lending Program made 1,830 loans; 1,175 remained outstanding as of the end of August 2023, 610 had been fully repaid, and delinquent payments rose to about 7.6 percent.

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“Highlights of GAO-24-106482: Federal Reserve Lending Programs: Status of Monitoring and Main Street Lending Program.” Original at www.gao.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/highlights-of-gao-24-106482-federal-reserve-lending-programs-status-of-9a503c5b18/, SHA-256 e6cfe62f821b57415b8bed21613c9afec4c65df787ae5986994c0b821ad32486.

Full text

December 2023

FEDERAL RESERVE LENDING PROGRAMS
Status of Monitoring and Main Street Lending
Program
Highlights of GAO-24-106482, a report to
congressional committees

Why GAO Did This Study What GAO Found
As of September 2023, several of the In response to the COVID-19 pandemic, the Board of Governors of the Federal
Federal Reserve’s 13 lending facilities Reserve System authorized 13 emergency lending programs—known as
continued to hold large amounts of facilities—to ensure the flow of credit to various parts of the economy. To
outstanding assets and loans. Nine of improve oversight, the Federal Reserve issued five internal reports from
the 13 facilities received funds December 2020 through June 2023 that identified opportunities to enhance
appropriated through the CARES Act internal processes and controls, including for collateral and asset management.
(section 4003). Of these nine, six had a GAO found that Federal Reserve Banks, which manage the facilities, addressed
total of about $12 billion in outstanding almost all of these opportunities. As of September 2023, no new enhancement
assets and loans. About 72 percent of
opportunities had been identified. GAO also found the Federal Reserve’s plans
this amount—about $8.6 billion—was
for ongoing monitoring of the facilities generally aligned with federal internal
held by facilities under the Main Street
Lending Program, which supported control standards for ongoing monitoring of an entity’s internal control system.
loans to small and midsize businesses
and nonprofits. The Federal Reserve is GAO analysis shows that while uncertainties exist in the credit markets targeted
required to monitor and report on the by the facilities, vulnerabilities remain low. Corporate bond issuances are higher
facilities until they no longer hold than prepandemic levels, and credit spreads (which reflect borrowing costs)
outstanding assets or loans. generally remain low. These factors indicate that corporations have relatively
easy access to credit. However, according to GAO analysis of available data and
The CARES Act includes a provision survey results, small businesses’ access to credit has decreased since 2022, as
for GAO to periodically report on
banks have tightened credit standards in response to a less positive economic
section 4003 loans, loan guarantees,
outlook and industry-specific problems. Also, municipal bond issuances have
and investments. This report examines
(1) the Federal Reserve’s oversight
decreased since mid-2022 and are at prepandemic levels. This trend reflects
and monitoring of the CARES Act challenges for raising new debt or refinancing existing debt, especially given that
facilities, (2) trends in the credit interest rates have increased. However, debt levels carried in sectors the
markets that the facilities targeted, and facilities targeted appear sustainable.
(3) the status and performance of Main
Street Lending Program loans. Of the 1,830 loans made through the Main Street Lending Program,1,175 (or 64
percent) remained outstanding as of the end of August 2023, the most recent
GAO reviewed Federal Reserve Bank data available (see figure). Since required interest payments began in August
documentation and analyzed agency 2021, most borrowers have been making them on time. However, delinquent
and other data on the facilities and
payments increased to about 7.6 percent in August 2023, which may reflect the
credit markets, including data on short-
effects of increased interest payments as variable rates on Main Street loans
and long-term corporate credit market
indicators. GAO also conducted loan- have risen. GAO found that 610 loans (or about 33 percent) had been fully
level analysis of Main Street Lending repaid, and 45 loans (or about 2.5 percent) had recorded losses.
Program loans and interviewed Main Street Lending Program Outstanding Loans, First Quarter 2021–Third Quarter 2023
Federal Reserve officials.

View GAO-24-106482. For more information,
contact Michael E. Clements at (202) 512-
8678 or clementsm@gao.gov. Note: Third quarter 2023 reflects data as of the end of August 2023.

United States Government Accountability Office

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