Title IV Provisions of the CARES Act (P.L. 116-136) — April 2, 2020 (Congressional Research Service)
Summary
This Congressional Research Service report, R46301, dated April 2, 2020 and coordinated by Andrew P. Scott, describes Title IV of the CARES Act (P.L. 116-136), signed into law on March 27. Subtitle A gives Treasury up to $500 billion through the Exchange Stabilization Fund: up to $25 billion for industries related to passenger air travel, up to $4 billion for cargo air carriers, up to $17 billion for businesses critical to national security, and at least $454 billion to support Federal Reserve facilities. Subtitle A also attaches restrictions on executive compensation, stock buybacks and dividends, and creates a Special Inspector General and a Congressional Oversight Commission. Subtitle B provides up to $32 billion to continue paying wages, salaries and benefits at airline-related industries.
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Full text
Title IV Provisions of the CARES Act (P.L.
116-136)
Andrew P. Scott, Coordinator
Analyst in Financial Economics
April 2, 2020
Congressional Research Service
7-....
www.crs.gov
R46301
SUMMARY
R46301
Title IV Provisions of the CARES Act (P.L. 116-
April 2, 2020
136) Andrew P. Scott,
Economic conditions have deteriorated rapidly in the past few weeks, as the Coronavirus Disease Coordinator
2019 (COVID-19) pandemic has caused many businesses and public institutions to limit or close Analyst in Financial
their operations, increasing financial hardship for many Americans due to layoffs or time off of Economics
work due to illness. COVID-19’s effect on the airline industry has been one of many areas of -re-acte--@crs.loc.gov
interest for Congress.
For a copy of the full report,
On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into please call 7-.... or visit
www.crs.gov.
law as P.L. 116-136. The act contains a number of provisions aimed broadly at stabilizing the
economy and helping affected households and businesses. Specifically, Title IV of the CARES
Act grants funds to industries affected by the virus and new authorities to the regulators and agencies responsible for those
industries, waives requirements for industries to meet certain regulatory requirements, and provides added oversight and
consumer protections, each on a temporary basis. These provisions can generally be classified into a few categories,
presented below.
Financial Assistance for Industry. Title IV, Subtitle A temporarily provides Treasury with up to $500 billion (through the
Exchange Stabilization Fund) to make loans, loan guarantees, or investments to assist businesses, states, and municipalities
affected by COVID-19—such assistance has been referred to by some as “bailouts.” Treasury can make loans and loan
guarantees directly to companies in three industries:
up to $25 billion to industries related to passenger air travel;
up to $4 billion to cargo air carriers; and
up to $17 billion to businesses critical to national security.
Various restrictions on executive compensation, stock buybacks and dividends, conflicts of interest, and loan forgiveness
apply to this assistance. Borrowers must provide financial protection to provide Treasury with potential financial upside (e.g.,
warrants). The remainder (at least $454 billion) is available to support facilities established by the Federal Reserve (Fed) to
provide liquidity to the financial system by supporting lending to businesses, states, and municipalities. These funds might be
used to cover future losses on Fed emergency facilities created in response to COVID-19, for example. Treasury and the Fed
have broad discretion to determine the terms of the assistance, subject to statutory restrictions. Oversight is provided through
reporting requirements and the creation of a Special Inspector General and a Congressional Oversight Commission. Subtitle
A also allows the Federal Deposit Insurance Corporation and National Credit Union Administration to temporarily insure
certain deposits above the deposit insurance limit and temporarily suspend a prohibition on using the Exchange Stabilization
Fund to insure money market funds (a type of mutual fund similar to a bank account).
Title IV, Subtitle B provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related
industries. The title also addresses domestic air service, including essential air service, aviation excise taxes, and collective
bargaining.
Consumer Protection. For consumers affected by COVID-19, Title IV would preserve the current status of credit reports for
consumers who modify or defer loan payments, allow residential mortgage borrowers to enter forbearance, and protect
renters from evictions.
Regulatory Relief. Title IV also provides regulatory relief for depository institutions, such as banks. For example, it
temporarily reduces capital requirements for smaller banks using the Community Bank Leverage Ratio, and it temporarily
suspends certain regulatory requirements involving the treatment of losses.
Congressional Research Service
Title IV Provisions of the CARES Act (P.L. 116-136)
Contents
Tables
Table 1. Title IV of the CARES Act (P.L. 116-136) ........................................................................ 2
Table 2. Select CRS Resources on COVID-19 Relevant to Title IV of the CARES Act .............. 18
Contacts
Author Contact Information .......................................................................................................... 19
Congressional Research Service
Title IV Provisions of the CARES Act (P.L. 116-136)
he Coronavirus Aid, Relief, and Economic Security Act (CARES Act; H.R. 748, as
T amended) passed the Senate 96-0 on March 25, 2020. It passed the House by voice vote
and was signed into law as P.L. 116-136 on March 27, 2020. The act contains numerous
provisions aimed broadly at stabilizing the economy and helping affected households and
businesses. These provisions include significant expansions in small business lending,
unemployment insurance, tax relief to individuals and employers, and economic stabilization
funding.
This report provides a section-by-section summary of Title IV of the CARES Act. These sections
can be grouped into the following categories:
Financial assistance for industry and the financial system (Sections 4002-4004,
4008, 4015-4016, 4019, 4028-4029):
Sections 4002, 4003, 4027, 4028, and 4029 provide up to $500 billion to the
Treasury Department to provide liquidity to eligible businesses and states,
including passenger and cargo air carriers and businesses pertinent to
national security; at least $454 billion of the assistance is to be made
available through a Federal Reserve liquidity facility for financial services.
Section 4004 sets executive compensation limits on certain companies
receiving assistance. Section 4019 restricts eligible recipients of assistance to
avoid conflicts of interest.
Section 4008 allows the Federal Deposit Insurance Corporation (FDIC) and
National Credit Union Administration (NCUA) to temporarily guarantee
deposits beyond statutory limits.
Section 4015 allows the Exchange Stabilization Fund to be used to guarantee
funds for money markets.
Section 4016 enhances credit union access to a liquidity facility.
In addition to the financial support provided in Section 4003, provisions targeted
at airline-related industries (Sections 4005-4007, 4025, Subtitle B):
Section 4005 addresses the continuation of domestic air service, including
essential air service to small communities.
Sections 4006 and 4119 require coordination of Title IV implementation with
the Transportation Secretary.
Section 4007 suspends aviation excise taxes until January 1, 2021.
Sections 4112, 4113, and 4120 provides up to $32 billion to continue
payment of employee wages, salaries, and benefits at airline-related
industries. Sections 4114 and 4116 limit recipient firms from taking certain
actions. Section 4117 permits the Secretary to accept certain forms of
financial compensation for taxpayers in exchange.
Sections 4025 and 4115 prohibits conditioning assistance on entering into
collective bargaining negotiations.
Temporary exemptions from statutory requirements (Sections 4009-4014,
4017):
Section 4009 allows the Federal Reserve to suspend Sunshine in Government
requirements.
Sections 4011 and 4012 exempt bank loans from certain limitations and
lowers capital requirements for community banks.
Congressional Research Service 1
Title IV Provisions of the CARES Act (P.L. 116-136)
Sections 4013 and 4014 provides exemptions to accounting requirements for
banks that hold certain products on their balance sheet.
Section 4017 waives certain congressional oversight and reporting
requirements under the Defense Production Act of 1950 for purchases or
loans made to expand productive capacity for amounts greater than $50
million.
Enhanced oversight (Sections 4018, 4020, 4026):
Sections 4018 and 4020 establishes a Special Inspector General and a
Congressional Oversight Committee to monitor activities made pursuant to
provisions in Title IV of the CARES Act. Section 4026 requires reports on
activities.
Enhanced consumer protections for borrowers and renters (Sections 4021-
4024):
Section 4021 preserves the status of credit reports for consumers who are
current on their credit obligations if they enter into an agreement to defer,
forbear, modify, make partial payments, or get any other assistance on their
loan payments from a financial institution due to the virus.
Sections 4022-4024 allow residential mortgage borrowers to enter
forbearance and protect renters from evictions.
Table 1 provides a detailed section-by-section summary of Title IV and lists CRS products and
experts for each section.
Table 1. Title IV of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Subtitle A—Coronavirus Economic Stabilization Act of 2020
Section 4001. Subtitle to be cited as the Coronavirus Economic n/a
Short Title Stabilization Act of 2020
Section 4002. Section 4002 creates definitions for Subtitle A, including n/a Marc Labonte,
Definitions eligible business defined as an air carrier or “U.S. Business Specialist in
that has not otherwise received adequate economic Macroeconomic
relief.” State is defined to include the states, DC, U.S. Policy
territories and possessions, multi-state entities, and
Indian tribes.
Congressional Research Service 2
Title IV Provisions of the CARES Act (P.L. 116-136)
Section 4003. Section 4003 implements the following: Loans and Marc Labonte,
Emergency (a) provides assistance of $500 billion overall for liquidity guarantees are Specialist in
Relief and to eligible businesses, states, and municipalities related to limited to 5- Macroeconomic
Taxpayer losses incurred as a result of coronavirus. year terms. Policy
Protections Prohibitions on
Authorizes the Treasury Secretary to make loans, loan
guarantees, and other investments. stock buybacks Rachel Y. Tang,
and dividends Analyst in
Loan subsidies are subject to the Federal Credit Reform for loan
Act (2 U.S.C. §§661 et seq). Transportation
recipients exist and Industry
(b) Of the $500 billion, up to $25 billion is available to for 12 months
industries related to passenger air carriers, as defined by after repayment,
the bill; up to $4 billion is available to cargo air carriers; unless already CRS Report
up to $17 billion is available to businesses critical to contractually R44185, Federal
national security. The remainder (at least $454 billion) is obligated. Reserve:
available to support facilities established by the Federal Workforce Emergency
Reserve (Fed) to provide liquidity to the financial system levels must be Lending, by Marc
by supporting lending to eligible businesses, states, and restored within Labonte.
municipalities. The Fed’s facilities may purchase 4 months of the CRS Insight
obligations in primary or secondary markets or make end of the IN11267,
loans. health crisis. COVID-19 and
(c)(1) The Treasury Secretary may establish the terms Funding for Civil
and conditions of the assistance, including interest rates Aviation, by
(based on current Treasury rates plus a risk adjustment). Rachel Y. Tang
The application process for non-Fed assistance should be
available within 10 days of enactment.
(c)(2) For the three specified industries above, Treasury
selects which eligible businesses to provide with loans or
loan guarantees directly, and the following terms apply.
(Treasury may not make other investments in these
industries.) The assistance should be prudent, based on
market rates before COVID-19 and reflect risk, should
be outstanding for no longer than 5 years and as short as
possible, and should be made because private credit is
unavailable. For 12 months after repayment, stock
buybacks and dividends are prohibited, unless already
contractually obligated. For recipients, employment
levels shall be maintained at March 24 levels until the end
of September “to the extent practicable.” The business
must be a U.S. business, as defined. To be eligible, losses
have occurred or are anticipated and the “continued
operations of the business are jeopardized, as
determined by the Secretary.”
(c)(3) For Fed programs involving direct loans supported
by this fund, stock buybacks and dividends are prohibited
for 12 months after repayment unless already
contractually obligated, and Section 4004 executive
compensation limits apply. The Treasury Secretary may
waive these requirement if “necessary to protect the
interest of the Federal Government.” The bill reaffirms
that any applicable requirement in Section 13(3) of the
Federal Reserve Act apply to these programs. Facilities
are limited to U.S. businesses, as defined.
The Treasury Secretary “shall endeavor to seek the
implementation of” a Fed facility that provides financing
to banks and other lenders to make direct loans to U.S.
eligible businesses (as defined) and nonprofits with
between 500 and 10,000 employees at an interest rate
not higher than 2% and with no principal or interest due
for 6 months. The business must certify that the loan is
Congressional Research Service 3
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
needed because of economic uncertainty and the funds
will be used to retain at least 90% of the workforce until
the end of September 2020 or restore at least 90% of
the February 1 workforce, with all compensation and
benefits restored within 4 months of the end of the
emergency. There are a series of restrictions on the
borrower, restrictions on stock buybacks and dividends,
not offshoring jobs for two years after repayment, not
being bankrupt, and abrogating existing collective
bargaining agreements or opposing union organizing
efforts. This facility does not restrict the Fed’s proposed
“Main Street Lending Program.”
In addition, the Secretary “shall endeavor” to create a
Fed facility for states and municipalities.
(d) As compensation for a non-Fed loan or loan
guarantee, the borrower must issue warrants or other
financial protection to Treasury, as determined by the
Secretary. Terms, including sale or exercise, must be set
by the Secretary for the benefit of the taxpayer. If
compensation grants shareholder voting power, the
Secretary cannot exercise voting power.
Loan forgiveness on any Section 4003 assistance is
prohibited.
(e) Order of repayment is specified. After repayment,
surplus funds are transferred to the Social Security
Federal Old-Age and Survivors Insurance Trust Fund.
(f) Treasury’s administrative costs are capped at $100
million. Treasury is authorized to hire, enter into
contracts, create investment vehicles, and issue
regulations to carry out the subtitle.
(g) The Secretary can use private financial firms as
financial agents for the program.
(h) Tax treatment of assistance is specified as
indebtedness. Equity acquired does not qualify as a
change in ownership for tax purposes.
Congressional Research Service 4
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4004. Section 4004 requires that a business receiving a loan or Limitations exist Gary Shorter,
Limitation on loan guarantee in the three industries identified in for a period of Specialist in
Certain Section 4003 must stipulate that between the 12 months (1 Financial
Employee agreement’s execution date and one year after the loan year) after Economics
Compensation or loan guarantee’s termination, any business official or receipt of loan
employee who received more than $425,000 in total or loan
compensation (as defined) during 2019: (1) cannot guarantee.
receive more than that amount during 12 consecutive
months in that period or (2) cannot receive more than
twice the total compensation received in 2019 in
severance pay or other benefits if their employment is
terminated. In addition, an agreement between the
Treasury Secretary and a business receiving a loan or
loan guarantee would need to stipulate that between the
agreement’s execution date and one year after the loan
or loan guarantee’s termination, any business official or
employee who received more than $3,000,000 in total
compensation in 2019 cannot receive more than
$3,000,000 plus one half of the sum of their total 2019
compensation minus $3,000,000 during 12 consecutive
months in that period.
Section 4005. Section 4005 grants the Secretary of Transportation Authority exists Rachel Y. Tang,
Continuation authority (until March 1, 2022) to require air carriers until March 1, Analyst in
of Certain Air that receive loans or loan guarantees under Section 4003 2022. Transportation
Service to maintain scheduled air service deemed necessary to and Industry
ensure services to any point served by that carrier CRS Insight
before March 1, 2020. It requires the Transportation IN11267,
Secretary to take into consideration air service needs of COVID-19 and
small and remote communities as well as the need to Funding for Civil
maintain health care and pharmaceutical supply chains. Aviation, by
This provision appears to direct the Transportation Rachel Y. Tang
Secretary to maintain the domestic air service network, CRS Report
including subsidized service provided to the more than R44176,
170 communities through the Essential Air Service Essential Air
program. Service (EAS), by
Rachel Y. Tang
Section 4006. Section 4006 requires the Treasury Secretary to n/a Rachel Y. Tang,
Coordination coordinate with the Transportation Secretary in Analyst in
with Secretary implementing provisions with respect to air carriers in Transportation
of Title IV, Subtitle A. and Industry
Transportation
Congressional Research Service 5
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4007. Section 4007 suspends aviation excise taxes until January Suspension Rachel Y. Tang,
Suspension of 1, 2021. These are the taxes and fees—including airline exists until Analyst in
Certain passenger ticket taxes, segment fees, air cargo fees, and January 1, 2021. Transportation
Aviation Excise aviation fuel taxes—paid by users of the national aviation and Industry
Taxes system. CRS Report
This excise tax revenue is deposited into the Airport R44749, The
and Airway Trust Fund, which provides funding to Airport and
federal civil aviation programs and operations. Airway Trust
Fund (AATF): An
Overview, by
Rachel Y. Tang
and Bart Elias
CRS Report
R42781, Federal
Civil Aviation
Programs: In
Brief, by Bart
Elias and Rachel
Y. Tang
CRS Insight
IN11267,
COVID-19 and
Funding for Civil
Aviation, by
Rachel Y. Tang
Congressional Research Service 6
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4008. Section 1105 of the Dodd-Frank Wall Street Reform and Preemptive David W.
Debt Consumer Protection Act (P.L. 111-203) authorizes the approval of Perkins,
Guarantee Federal Deposit Insurance Corporation (FDIC) to guarantee Specialist in
Authority establish a program to guarantee the debt of solvent programs exists Macroeconomic
banks—i.e., banks whose assets are greater than their until December Policy
liabilities—if the FDIC and the Federal Reserve 31, 2020. Darryl Getter,
determine that a liquidity event is in progress. As Increase in Specialist in
enacted, the section does not allow the program to NCUA share Financial
guarantee deposits held at banks. The FDIC insures insurance Economics
deposits up to a maximum of $250,000 per account. coverage
Businesses and government, however, often have terminates no
noninterest bearing accounts that exceed that maximum. later than CRS Report
Section 4008 amends Dodd-Frank to allow the FDIC to December 31, R43413, Costs of
guarantee deposits in such transaction accounts, similar 2020. Government
to the guarantee program created in the 2008 financial Interventions in
crisis. Response to the
In addition, Dodd-Frank requires that Congress pass a Financial Crisis: A
joint resolution of approval of the guarantee program. Retrospective, by
Section 4008 preemptively grants approval of a Baird Webel
guarantee program of any amount. and Marc
Labonte
Section 4008 also allows the National Credit Union
Administration (NCUA) Board to increase the share CRS Report
insurance coverage provided by the National Credit R42787, An
Union Share Insurance Fund (NCUSIF) on any Overview of the
noninterest-bearing transaction account in any federally Transaction
insured credit union without exception. Account
Guarantee (TAG)
Program and the
Potential Impact
of Its Expiration
or Extension, by
Sean M. Hoskins
CRS Report
R43167, Policy
Issues Related to
Credit Union
Lending, by
Darryl E. Getter
Section 4009. Under the Government in the Sunshine Act (5 U.S.C. Authority Marc Labonte,
Temporary §552b), the Fed must provide advanced notice of terminates the Specialist in
Government In meetings, make those meetings open to the public, and earliest of (1) Macroeconomic
the Sunshine make meetings’ details available to the public, unless the date the Policy
Act Relief statutory exemptions apply. This section allows the public health
Federal Reserve Board to conduct closed meetings emergency ends
without regard to this act based on a written or (2) the end
determination by the chairman of unusual and exigent of 2020.
circumstances. The Board must keep a record of all
votes at closed meetings.
Congressional Research Service 7
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4010. Sections 3309 through 3318 of Title 5 of the U.S. Code Exemption Barbara
Temporary pertain to certain authorities and rules for civil service exists until the Schwemle,
Hiring hiring. Section 4010 provides exemptions to these earliest of (1) Analyst in
Flexibility sections of the Code to allow the Secretary of Housing the date the American
and Urban Development, the Securities and Exchange public health National
Commission, and the Commodity Futures Trading emergency ends Government
Commission to recruit and appoint candidates to fill or (2) the end CRS In Focus
temporary and term appointments upon a determination of 2020. IF11468, Federal
that expedited procedures are necessary to respond to Executive
COVID-19. Agencies: Hiring
Flexibilities for
Emergency
Situations, by
Barbara L.
Schwemle
Section 4011. National banks are generally subject to limits on how Authority David W.
Temporary much they can lend to a single borrower relative to their terminates the Perkins,
Lending Limit capital and other balance sheet characteristics, unless the earlier of (1) the Specialist in
Waiver loan qualifies for an exception. The Office of the date the public Macroeconomic
Comptroller of the Currency (OCC) has relatively health Policy
narrow authority to approve certain loans for an emergency ends
exception to the limit. Section 4011 grants the OCC or (2) the end
broad authority to exempt loans when it is in the public of 2020.
interest.
Section 4012. Banks generally face a variety of safety and soundness Relief expires David W.
Temporary requirements regarding how much capital they must the earlier of (1) Perkins,
Relief for hold to protect against possible losses on their assets. the date the Specialist in
Community Capital is a relatively expensive source of funding, and so public health Macroeconomic
Banks requiring higher levels can reduce the amount of lending emergency ends Policy
banks do. Certain small banks can elect to be subject to or (2) the end
a single, relatively simple—but relatively high—capital of 2020.
rule called the Community Bank Leverage Ratio (CBLR). CRS Report
Bank regulators are authorized to set the ratio between R45989,
8% and 10%. Currently, it is set at 9%. Section 4012 Community Bank
directs the regulators to lower it to 8% and to give Leverage Ratio
banks that fall below that level a reasonable grace period (CBLR):
to come back into compliance with the CBLR. Background and
Analysis of Bank
Data, by David
W. Perkins
Section 4013. A Troubled Debt Restructuring (TDR) is a concession Relief expires Raj Gnanarajah,
Temporary by the lender (the creditor) to a troubled borrower that the earlier of (1) Analyst in
Relief from it would not generally consider under normal 60 days after Financial
Troubled Debt circumstances. Generally Accepted Accounting Principles the public health Economics
Restructurings (GAAP) require the lender to reflect in its financial emergency
records any potential loss as a result of a TDR. declaration is
Recording of such losses could negatively impact the lifted or (2) the
lender’s ability to meet regulatory requirements. Section end of 2020.
4013 requires federal bank and credit union regulators
to allow lenders to determine if they should suspend the
GAAP requirements for recognizing any potential
COVID-19-related losses from a TDR related to a loan
modification.
Congressional Research Service 8
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4014. Credit loss reserves help mitigate the overstatement of Delay of CECL Raj Gnanarajah,
Optional income on loans and other assets by adjusting for implementation Analyst in
Temporary potential future losses on related loans and other assets. until the earlier Financial
Relief from In response to banks' financial challenges during and after of (1) the date Economics
Current the 2007-2009 financial crisis, Financial Accounting the public health
Expected Standards Board (FASB) promulgated a new credit loss emergency ends
Credit Losses standard—Current Expected Credit Loss (CECL)—in or (2) the end CRS Report
June 2016. CECL requires early recognition of losses as of 2020. R45339,
compared to the current methodology. All public Banking: Current
companies were required to issue financial statements Expected Credit
that incorporated CECL for reporting periods beginning Loss (CECL), by
December 15, 2019. This provision gives banking Raj Gnanarajah
institutions, including credit unions, the option to
temporarily delay CECL implementation.
Congressional Research Service 9
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4015. Treasury’s Exchange Stabilization Fund (ESF) was Guarantee Marc Labonte,
Non- originally created to stabilize the dollar exchange rate. In terminates Specialist in
Applicability of 2008, the ESF was used to guarantee U.S. money market December 31, Macroeconomic
Restrictions on mutual funds to stop a run on money markets. Section 2020 Policy
ESF During 131 of the Emergency Economic Stabilization Act of Baird Webel,
National 2008 (P.L. 110-343) prohibited the use of the ESF to Acting Section
Emergency guarantee money markets in the future. Section 4015 Research
temporarily suspends that prohibition to permit a Manager
guarantee and appropriate any funds paid out from the
ESF in excess of fees under the guarantee. Martin A.
Weiss, Specialist
in International
Trade and
Finance
Eva Su, Analyst
in Financial
Economics
CRS In Focus
IF11474,
Treasury’s
Exchange
Stabilization Fund
and COVID-19,
by Marc
Labonte, Baird
Webel, and
Martin A. Weiss
CRS In Focus
IF11320, Money
Market Mutual
Funds: A Financial
Stability Case
Study, by Eva Su
CRS Report
R43413, Costs of
Government
Interventions in
Response to the
Financial Crisis: A
Retrospective, by
Baird Webel
and Marc
Labonte
Section 4016. Section 4016 temporarily enhances access to the Central Increase in CLF Darryl Getter,
Temporary Liquidity Facility (CLF) for corporate credit unions to borrowing Specialist in
Credit Union meet liquidity needs as long as they have made threshold is Financial
Provisions reasonable efforts to first use primary sources of effective on date Economics
liquidity, such as their balance sheets and market funding of enactment,
sources. Section 4016 also increases resources available expires
to meet liquidity needs through the facility by December 31,
temporarily expanding the ability to borrow to a value 2020.
16 times the subscribed capital stock and surplus of the
CLF (up from the statutory limit of 12 times).
Congressional Research Service 10
Title IV Provisions of the CARES Act (P.L. 116-136)
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Provision Description Dates Resources
Section 4017. Title III of the Defense Production Act (DPA; 50 U.S.C. Effective upon Michael Cecire,
Increasing §§4501 et seq.) allows the President to incentivize the enactment; Analyst in
Access to domestic industrial base to expand the production and some provisions Intergovern-
Materials supply of critical materials and goods. Section 4017 exists for two mental
Necessary for waives certain congressional oversight and reporting years, and Relations and
National requirements under Title III of the DPA. Although the others for one Economic
Security and bulk of DPA authorities are made available at the year. Development
Pandemic President’s discretion, Title III requires an act of Policy
Recovery Congress for purchases or loans made to expand Heidi Peters,
productive capacity in promotion of the national defense, Analyst in U.S.
broadly defined, for amounts greater than $50 million, Defense
and written notifications made to the relevant Acquisition
congressional committees of jurisdiction—the Senate Policy
Committee on Banking, Housing, and Urban Affairs, and
the House Committee on Financial Services—at least 30
days in advance. CRS Insight
IN11280,
COVID-19:
Industrial
Mobilization and
Defense
Production Act
(DPA)
Implementation,
by Michael H.
Cecire and
Heidi M. Peters
CRS Insight
IN11231, The
Defense
Production Act
(DPA) and
COVID-19: Key
Authorities and
Policy
Considerations,
by Michael H.
Cecire and
Heidi M. Peters
CRS Report
R43767, The
Defense
Production Act of
1950: History,
Authorities, and
Considerations
for Congress, by
Michael H.
Cecire and
Heidi M. Peters
Congressional Research Service 11
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4018. Section 4018 establishes a Special Inspector General for SIGPR will Ben Wilhelm,
Special Pandemic Recovery (SIGPR). The SIGPR is appointed by terminate 5 Analyst in
Inspector the President with the advice and consent of the Senate years after Government
General for as soon as is practicable after activity under Section 4003 enactment. Organization
Pandemic begins. The nomination is made based on integrity and Report to and
Recovery relevant subject matter expertise. The SIGPR is subject Congress due Management
to removal by the President subject to the congressional within 60 days
notification requirements in Section 3(b) of the Inspector of SIGPR
General Act of 1978. appointment,
The SIGPR is tasked with conducting audits and and quarterly
investigations of the Treasury Secretary’s activities under thereafter.
the CARES Act. This includes collecting and summarizing
specified data on the programs established by the
Treasury Secretary including lists of businesses
participating in the programs. To fulfill these duties, the
SIGPR is authorized to hire staff, enter into contracts as
necessary, and collect information from federal
government entities. Of the amount appropriated in
Section 4027, $25 million is available to support the
SIGPR’s activities.
The Treasury Secretary is obligated to take action to
address deficiencies identified by the SIGPR or certify to
the appropriate committees that no remedial action is
necessary.
Section 4019. Section 4019 establishes that certain entities are n/a Ben Wilhelm,
Conflicts of ineligible to participate in Section 4003 transactions. An (See Section Analyst in
Interest ineligible entity is a covered individual who owns a 4003) Government
controlling interest in that entity (defined as “not less Organization
than 20 percent, by vote or value, of the outstanding and
amount of any class of equity interest in an entity”). Management
Covered individuals are the President, the Vice
President, an executive department head, a Member of
Congress, or the spouse, child, or spouse of a child of
any of those individuals.
Section 4020. Section 4020 establishes a congressional commission to Congressional Ben Wilhelm,
Congressional conduct oversight of the Fed’s and Treasury’s Oversight Analyst in
Oversight implementation of Title IV provisions. The commission Commission Government
Commission must submit reports on the use of the authorities terminates Organization
granted to the agencies under these provisions and the September 30, and
impact and effectiveness of the loans, guarantee 2025. Management
programs, and investments made under Subtitle A, as
well as the extent to which information on these
transactions contributed to market transparency. The
commission is to comprise five members selected by the
House and Senate majority and minority leaderships. The
commission may hold hearings and obtain data from
federal department or agency heads. Appropriations
from House and Senate funding are authorized.
Congressional Research Service 12
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section. 4021. Consumers can harm their credit scores when they miss Covered period Cheryl Cooper,
Credit consumer loan payments, which can impact future access begins January Analyst in
Protection to credit. Section 4021 requires data furnishers (such as 31, 2020, and Financial
During banks, credit card companies, debt collection agencies, ends the later of Economics
COVID-19 and other companies that process financial information) (I) 120 days Darryl Getter,
during the COVID-19 pandemic covered period to after enactment, Specialist in
report to the credit bureaus that consumers are current or (II) 120 days Financial
on their credit obligations if they enter into an after the Economics
agreement to defer, forbear, modify, make partial national
payments, or get any other assistance on their loan emergency
payments from a financial institution and fulfil those declared by the CRS Report
requirements, provided they were current before this President on R44125,
period. If the consumer was delinquent before the March 13, 2020 Consumer Credit
covered period, then the furnisher should maintain the terminates. Reporting, Credit
delinquent status unless the consumer brings the Bureaus, Credit
account or obligation current. Scoring, and
Related Policy
Issues, by Cheryl
R. Cooper and
Darryl E. Getter
Section 4022. Section 4022 gives consumers the right to request a A covered Katie Jones,
Foreclosure forbearance (temporary reprieve from loan payments) period is not Analyst in
Moratorium and it provides a moratorium on foreclosures on loans defined for this Housing Policy
and Consumer that are either (1) mortgages or reverse mortgages section. Libby Perl,
Right to insured by the Federal Housing Administration (FHA) or Forbearance can Specialist in
Request guaranteed under provisions of the National Housing be granted for Housing Policy
Forbearance Act (12 U.S.C. §§1707 et seq., 12 U.S.C. §1715z-20); (2) up to 180 days
guaranteed under section 184 or 184A programs for Darryl Getter,
and extended Specialist in
eligible tribal members and Native Hawaiians, another 180
respectively, pursuant to the Housing and Community Financial
days. Economics
Development Act (12 U.S.C. §§1715z-13a and 1715z-
13b); (3) loans guaranteed or insured by either the Foreclosures Andrew Scott,
Department of Veterans Affairs or (including those made (judicial or non- Analyst in
by) Department of Agriculture; or (4) loans purchased judicial) banned Financial
or securitized by Freddie Mac or Fannie Mae (the GSEs). for a 60-day Economics
Forbearance could be granted for up to 180 days, and period beginning
could be extended up to 180 days, without accruing fees, March 18, 2020.
CRS In Focus
penalties, or interest beyond the amounts scheduled for
IF10126,
regular payments. Servicers would need to notify
Introduction to
borrowers of their right to request forbearance.
Financial Services:
Additionally, servicers would not be allowed to initiate a
The Housing
foreclosure process (judicial or non-judicial) for a 60-day
Finance System,
period beginning March 18, 2020.
by Katie Jones
and N. Eric
Weiss
Congressional Research Service 13
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4023. Section 4023 allows multifamily borrowers with federally Section 4023 Darryl Getter,
Forbearance of backed multifamily mortgage loans (see Section 4022), provision expire Specialist in
Residential who were current on payments as of February 1, 2020, the earlier of (1) Financial
Mortgage Loan to request forbearance for a period up to 30 days, which the date the Economics
Payments for could be extended up to two additional 30-day periods. public health
Multifamily Any borrower receiving forbearance under this emergency ends
Properties provision would not be allowed to initiate any eviction or (2) the end
with Federally action or charge any late fees or other penalties to a of 2020.
Backed Loans tenant dwelling in the property on the loan. Additionally, Forbearance
a borrower who received forbearance would not be allowed for a
allowed to require a tenant to vacate a dwelling before period up to 30
30 days after the date the borrower provides notice to days, can be
vacate, and a notice to vacate could not be issued until extended up to
the expiration of forbearance. two 30-day
periods.
Notice to
vacate banned
until expiration
of forbearance.
Section 4024. Section 4024 prohibits eviction actions and fees, Evictions Katie Jones,
Temporary penalties, or other charges to tenants of properties that banned upon Analyst in
Moratorium participate in covered housing programs (including the enactment for a Housing Policy
on Eviction public housing, Housing Choice Voucher, Section 8 and period of 120 Libby Perl,
Filings other project-based rental assistance, rural rental days. Specialist in
assistance, and Low-Income Housing Tax Credit Housing Policy
program, among others); or properties that have either
a federally backed single family mortgage or multifamily
loan (i.e., a loan insured or guaranteed by a federal CRS Report
agency, such as the FHA or USDA, or one that is sold to RL34591,
one of the GSEs) for a period of 120 days beginning on Overview of
the date of enactment. During this period, lessors of Federal Housing
these units would be banned from issuing a notice to Assistance
vacate until after the provision expires, and tenants Programs and
would be given an additional 30 days from the issuance Policy, by Maggie
of a notice to vacate. McCarty, Libby
Perl, and Katie
Jones
Section 4025. Section 4025 prohibits any federal entity from Provisions Rachel Tang
Protection of conditioning the issuance of a loan or loan guarantee remain in effect
Collective under provisions in Section 4003 on an air carrier’s or until one year
Bargaining eligible business’s implementation of measures to enter after the loan or
Agreement into negotiations with the certified bargaining loan guarantee
representative of a craft or class of employees of the air is no longer
carrier or eligible business under the Railway Labor Act outstanding.
(45 U.S.C. §§151 et seq.) or the National Labor Relations
Act (29 U.S.C. §§151 et seq.) regarding pay or other
terms and conditions of employment.
Congressional Research Service 14
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section. 4026. Section 4026 requires the Treasury Secretary to publish Treasury must Ben Wilhelm,
Reports a description of any assistance to passenger air carriers, publish: a Analyst in
cargo air carriers, and businesses critical to national description of Government
security under Section 4003(b) on its website within 72 assistance on its Organization
hours. Additionally, the provision requires Treasury to website within and
provide reports to Congress and the President, pursuant 72 hours; a Management
to 31 U.S.C. §5302(c), on those Section 4003(b) report every 14
activities and publish them. Treasury is also obligated to days for 1 year
publish summaries of the loan and guarantee programs following
outstanding every 30 days. The provision requires the enactment, and
Treasury Secretary and the Fed Chair to testify quarterly every 30 days
to Congress on the obligations and activities pursuant to thereafter,
this act. summarizing
The provision also requires the Treasury to post on its actions in that
website criteria and guidelines for applications to, as well period; and loan
as contracts associated with, loans and guarantees made and guarantee
pursuant to this act. Treasury is required to publish a programs
report every 14 days for the year following enactment, summaries
and every 30 days thereafter, summarizing the actions every 30 days.
taken during the period. The Fed must
Section 4026 requires the Fed to provide reports in report to
accordance with 12 U.S.C. §343(3)(C)(i) to Congress Congress within
within 7 days of authorizing a new facility or other 7 days of
assistance. Additionally, the Fed is to provide reports to authorizing a
Congress on outstanding loan and guarantee programs new facility or
every 30 days These reports are to be publicly released other
within 7 days of delivery to Congress. assistance.
Section 4026 also requires the Government Treasury
Accountability Office (GAO) to conduct a study on the Secretary and
loans, loan guarantees, and other investment programs the Fed must
under Section 4003, and provide a report to several testify to
House and Senate committees within 9 months of Congress
enactment, and annually through the year succeeding the quarterly.
last year that loans or guarantees are outstanding. GAO must
provide a
report within 9
months of
enactment and
annually
throughout the
year succeeding
the last year of
outstanding
loans and
guarantees.
Congressional Research Service 15
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4027. $500 billion is appropriated to the ESF to carry out the Any funds Marc Labonte,
Direct subtitle (see Section 4015 for a description). remaining at the Specialist in
Appropriation beginning of Macroeconomic
2021 may only Policy
be used for
outstanding
assistance. Any CRS In Focus
funds remaining IF11474,
at the beginning Treasury’s
of 2026 are to Exchange
be returned and Stabilization Fund
used for deficit and COVID-19,
reduction. by Marc
Labonte, Baird
Webel, and
Martin A. Weiss
Section 4028. Assistance must be in compliance with the terms and n/a Marc Labonte,
Rule of conditions of the subtitle, including that assistance is in Specialist in
Construction the interest of the federal government. Macroeconomic
Policy
Section 4029. Section 4029 terminates the authorities provided under Subtitle A Andrew Scott,
Termination of Subtitle A to make new loans, guarantees, and other authorities Analyst in
Authority investments after December 31, 2020. Outstanding terminate Financial
loans, guarantees, and investments after this date would December Economics
be allowed to be modified, restructured, or amended, 2020; loans and
but not forgiven. The duration of these activities made guarantees
under Section 4003(b)(1) that is modified, restructured, cannot extend
or amended, would not be allowed to extend beyond 5 beyond 5 years
years of the origination of the loan or guarantee. of origination.
Subtitle B—Air Carrier Worker Support
Section 4111. Defines the terms airline catering employee, airline catering n/a Marc Levinson,
Definitions services, contractor (as related to airline catering or air Section
carrier services), and employee. These definitions are Research
applied in subsequent sections of Subtitle B to determine Manager
which individuals are eligible for air carrier worker
support.
Section 4112. Directs the Treasury Secretary to provide $25 billion to n/a
Pandemic continue payment of employee wages, salaries, and
Relief for benefits at passenger air carriers; $4 billion for similar
Aviation purposes at cargo air carriers; and $3 billion for
Workers employees of contractors that perform catering
functions for air carriers or on-airport work directly
related to air transportation of persons, property, or
mail.
Congressional Research Service 16
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4113. Directs the Treasury Secretary to provide individual air n/a
Procedures for carriers with amounts equal to the amount of salaries
Providing and benefits paid from April 1, 2019, through September
Payroll 30, 2019, and to contractors on a similar basis. Requires
Support the Secretary to establish procedures for requesting
assistance within five days of enactment and to make
initial payments of assistance within 10 days of
enactment. Gives the Secretary authority to reduce
amounts due to air carriers and contractors on a pro
rata basis if amounts requested exceed amounts
authorized in Section 4112.
Section 4114. Prohibits air carriers and contractors that receive Workforce
Required financial assistance, and their affiliates, from conducting restrictions in
Assurances involuntary furloughs or from reducing rates of pay and effect until
benefits until September 30, 2020, and from September 30,
repurchasing shares and paying dividends through 2020;
September 30, 2021. Authorizes the Transportation restrictions on
Secretary through March 1, 2022, to require air carriers stock buyback
receiving financial assistance to maintain service to any and dividends
point served before March 1, 2020, as the Secretary until September
deems necessary. 30, 20201;
authority to
maintain service
expires March
1, 2022.
Section 4115. Prohibits the Treasury Secretary from conditioning n/a
Protection of assistance to air carriers or contractors on agreement to
Collective enter negotiations with a labor union under the Railway
Bargaining Labor Act or the National Labor Relations Act.
Agreement
Section 4116. Requires air carriers or contractors seeking assistance to Covered period
Limitation on enter agreements with the Treasury Secretary providing from March 24,
Certain that between March 24, 2020, and March 24, 2022, no 2020 to March
Employee officer or employee whose compensation exceeded 24, 2022.
Compensation $425,000 in calendar year 2019 will receive higher
compensation in any 12-month period, severance pay
exceeding twice the compensation paid in 2019, or total
compensation exceeding $3 million plus half of any
compensation over $3 million the individual received in
2019. Total compensation is defined to include salary,
bonuses, stock awards, and other financial benefits.
Section 4117. Authorizes the Treasury to receive stock warrants, n/a
Stock options, preferred stock, debt securities, notes, or other
Warrants financial instruments that “provide appropriate
compensation to the Federal Government for the
provision of financial assistance.”
Section 4118. Requires the Treasury Secretary to submit to Congress Report due to
Reports a report on financial assistance to air carriers and Congress by
contractors. November 1,
2020, and again
one year
following
enactment.
Congressional Research Service 17
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective CRS Experts/
Provision Description Dates Resources
Section 4119. Directs the Treasury Secretary to coordinate with the n/a
Coordination Transportation Secretary in implementing these
provisions.
Section 4120. Appropriates $32 billion to carry out Sections 4111- n/a
Direct 4119.
Appropriation
Source: Congressional Research Service analysis of P.L. 116-136.
Notes: The bill defines the date on which the national emergency ends as “the date on which the national
emergency concerning the novel coronavirus disease (COVID-19) outbreak declared by the President on March
13, 2020, under the National Emergencies Act (50 U.S.C. §1601 et seq.) terminates.”
In addition to Congressional Research Service (CRS) products in Table 1 that address the subject
of specific provisions, Table 2 summarizes CRS products pertaining to general issues addressed
in Title IV of the CARES Act. More can be found at https://www.crs.gov/resources/coronavirus-
disease-2019. For a list of CRS experts covering the issues pertaining to each title in the CARES
Act, see CRS Report R46299, Coronavirus Aid, Relief, and Economic Security (CARES) Act:
CRS Experts, by William L. Painter and Diane P. Horn.
Table 2. Select CRS Resources on COVID-19 Relevant to Title IV of the CARES Act
Subject Title, Author
Airlines CRS Insight IN11267, COVID-19 and Funding for Civil Aviation, by Rachel Y. Tang
Airlines CRS Insight IN11265, COVID-19 and Passenger Airline Travel, by Bart Elias
Banking & Finance CRS Insight IN11244, The Financial Industry and Consumers Struggling to Pay Bills
during the COVID-19 (Coronavirus) Outbreak, by Cheryl R. Cooper
Banking & Finance CRS Insight IN11278, Banking Regulators’ Response to COVID-19, by Andrew P. Scott
and David W. Perkins
Banking & Finance CRS Insight IN11259, Federal Reserve: Recent Actions in Response to COVID-19, by
Marc Labonte
Banking & Finance CRS In Focus IF11474, Treasury’s Exchange Stabilization Fund and COVID-19, by Marc
Labonte, Baird Webel, and Martin A. Weiss
Banking & Finance CRS Insight IN11275, COVID-19 and Corporate Debt Market Stress, by Eva Su
Defense Production Act CRS Insight IN11231, The Defense Production Act (DPA) and COVID-19: Key
Authorities and Policy Considerations, by Michael H. Cecire and Heidi M. Peters
Defense Production Act CRS Insight IN11280, COVID-19: Industrial Mobilization and Defense Production Act
(DPA) Implementation, by Michael H. Cecire and Heidi M. Peters
Federal Personnel Policy CRS In Focus IF11468, Federal Executive Agencies: Hiring Flexibilities for Emergency
Situations, by Barbara L. Schwemle
Source: CRS.
Congressional Research Service 18
Title IV Provisions of the CARES Act (P.L. 116-136)
Author Contact Information
Andrew P. Scott, Coordinator Maggie McCarty
Analyst in Financial Economics Specialist in Housing Policy
/redacted/@crs.loc.gov
, 7-.... /redacted/@crs.loc.gov , 7-....
Michael H. Cecire David W. Perkins
Analyst in Intergovernmental Relations and Specialist in Macroeconomic Policy
Economic Development Policy /redacted/@crs.loc.gov, 7-....
/redacted /@crs.loc.gov
, 7-....
Cheryl R. Cooper Barbara L. Schwemle
Analyst in Financial Economics Analyst in American National Government
/redacted/@crs.loc.gov , 7-.... /redacted/@crs.loc.gov , 7-....
Darryl E. Getter Gary Shorter
Specialist in Financial Economics Specialist in Financial Economics
/redacted/@crs.loc.gov
, 7-.... /redacted/@crs.loc.gov, 7-....
Raj Gnanarajah Eva Su
Analyst in Financial Economics Analyst in Financial Economics
/redacted/@crs.loc.gov , 7-.... /redacted/@crs.loc.gov
, 7-....
Katie Jones Rachel Y. Tang
Analyst in Housing Policy Analyst in Transportation and Industry
/redacted/@crs.loc.gov, 7-.... /redacted/@crs.loc.gov
, 7-....
Marc Labonte Ben Wilhelm
Specialist in Macroeconomic Policy Analyst in Government Organization and
/redacted/@crs.loc.gov , 7-.... Management
/redacted/@crs.loc.gov , 7-....
Marc Levinson
Section Research Manager
/redacted/@crs.loc.gov , 7-....
Congressional Research Service R46301 · VERSION 1 · NEW 19
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