Title IV Provisions of the CARES Act (P.L. 116-136)
Congressional research reportApr 2, 2020
Ask Donna
What actually matters in this document.
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
Title IV Provisions of the CARES Act (P.L. 116136)
Economic conditions have deteriorated rapidly in the past few weeks, as the Coronavirus Disease
2019 (COVID-19) pandemic has caused many businesses and public institutions to limit or close
their operations, increasing financial hardship for many Americans due to layoffs or time off of
work due to illness. COVID-19’s effect on the airline industry has been one of many areas of
interest for Congress.
R46301
April 2, 2020
Andrew P. Scott,
Coordinator
Analyst in Financial
Economics
-re-acte--@crs.loc.gov
For a copy of the full report,
please call 7-.... or visit
www.crs.gov.
On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into
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
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.
T
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 40214024):
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)
Provision
Effective
Dates
Description
CRS Experts/
Resources
Subtitle A—Coronavirus Economic Stabilization Act of 2020
Section 4001.
Short Title
Subtitle to be cited as the Coronavirus Economic
Stabilization Act of 2020
n/a
Section 4002.
Definitions
Section 4002 creates definitions for Subtitle A, including
eligible business defined as an air carrier or “U.S. Business
that has not otherwise received adequate economic
relief.” State is defined to include the states, DC, U.S.
territories and possessions, multi-state entities, and
Indian tribes.
n/a
Congressional Research Service
Marc Labonte,
Specialist in
Macroeconomic
Policy
2
Title IV Provisions of the CARES Act (P.L. 116-136)
Section 4003.
Emergency
Relief and
Taxpayer
Protections
Section 4003 implements the following:
(a) provides assistance of $500 billion overall for liquidity
to eligible businesses, states, and municipalities related to
losses incurred as a result of coronavirus.
Authorizes the Treasury Secretary to make loans, loan
guarantees, and other investments.
Loan subsidies are subject to the Federal Credit Reform
Act (2 U.S.C. §§661 et seq).
(b) Of the $500 billion, up to $25 billion is available to
industries related to passenger air carriers, as defined by
the bill; up to $4 billion is available to cargo air carriers;
up to $17 billion is available to businesses critical to
national security. 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 eligible businesses, states, and
municipalities. The Fed’s facilities may purchase
obligations in primary or secondary markets or make
loans.
(c)(1) The Treasury Secretary may establish the terms
and conditions of the assistance, including interest rates
(based on current Treasury rates plus a risk adjustment).
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
Loans and
guarantees are
limited to 5year terms.
Prohibitions on
stock buybacks
and dividends
for loan
recipients exist
for 12 months
after repayment,
unless already
contractually
obligated.
Workforce
levels must be
restored within
4 months of the
end of the
health crisis.
Marc Labonte,
Specialist in
Macroeconomic
Policy
Rachel Y. Tang,
Analyst in
Transportation
and Industry
CRS Report
R44185, Federal
Reserve:
Emergency
Lending, by Marc
Labonte.
CRS Insight
IN11267,
COVID-19 and
Funding for Civil
Aviation, by
Rachel Y. Tang
3
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Effective
Dates
CRS Experts/
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
Dates
CRS Experts/
Resources
Section 4004 requires that a business receiving a loan or
loan guarantee in the three industries identified in
Section 4003 must 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 $425,000 in total
compensation (as defined) during 2019: (1) cannot
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.
Limitations exist
for a period of
12 months (1
year) after
receipt of loan
or loan
guarantee.
Gary Shorter,
Specialist in
Financial
Economics
Section 4005.
Continuation
of Certain Air
Service
Section 4005 grants the Secretary of Transportation
authority (until March 1, 2022) to require air carriers
that receive loans or loan guarantees under Section 4003
to maintain scheduled air service deemed necessary to
ensure services to any point served by that carrier
before March 1, 2020. It requires the Transportation
Secretary to take into consideration air service needs of
small and remote communities as well as the need to
maintain health care and pharmaceutical supply chains.
This provision appears to direct the Transportation
Secretary to maintain the domestic air service network,
including subsidized service provided to the more than
170 communities through the Essential Air Service
program.
Authority exists
until March 1,
2022.
Rachel Y. Tang,
Analyst in
Transportation
and Industry
CRS Insight
IN11267,
COVID-19 and
Funding for Civil
Aviation, by
Rachel Y. Tang
CRS Report
R44176,
Essential Air
Service (EAS), by
Rachel Y. Tang
Section 4006.
Coordination
with Secretary
of
Transportation
Section 4006 requires the Treasury Secretary to
coordinate with the Transportation Secretary in
implementing provisions with respect to air carriers in
Title IV, Subtitle A.
n/a
Rachel Y. Tang,
Analyst in
Transportation
and Industry
Provision
Description
Section 4004.
Limitation on
Certain
Employee
Compensation
Congressional Research Service
5
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Section 4007.
Suspension of
Certain
Aviation Excise
Taxes
Section 4007 suspends aviation excise taxes until January
1, 2021. These are the taxes and fees—including airline
passenger ticket taxes, segment fees, air cargo fees, and
aviation fuel taxes—paid by users of the national aviation
system.
This excise tax revenue is deposited into the Airport
and Airway Trust Fund, which provides funding to
federal civil aviation programs and operations.
Congressional Research Service
Effective
Dates
CRS Experts/
Resources
Suspension
exists until
January 1, 2021.
Rachel Y. Tang,
Analyst in
Transportation
and Industry
CRS Report
R44749, The
Airport and
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
6
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Section 1105 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (P.L. 111-203) authorizes the
Federal Deposit Insurance Corporation (FDIC) to
establish a program to guarantee the debt of solvent
banks—i.e., banks whose assets are greater than their
liabilities—if the FDIC and the Federal Reserve
determine that a liquidity event is in progress. As
enacted, the section does not allow the program to
guarantee deposits held at banks. The FDIC insures
deposits up to a maximum of $250,000 per account.
Businesses and government, however, often have
noninterest bearing accounts that exceed that maximum.
Section 4008 amends Dodd-Frank to allow the FDIC to
guarantee deposits in such transaction accounts, similar
to the guarantee program created in the 2008 financial
crisis.
In addition, Dodd-Frank requires that Congress pass a
joint resolution of approval of the guarantee program.
Section 4008 preemptively grants approval of a
guarantee program of any amount.
Section 4008 also allows the National Credit Union
Administration (NCUA) Board to increase the share
insurance coverage provided by the National Credit
Union Share Insurance Fund (NCUSIF) on any
noninterest-bearing transaction account in any federally
insured credit union without exception.
Preemptive
approval of
guarantee
programs exists
until December
31, 2020.
Increase in
NCUA share
insurance
coverage
terminates no
later than
December 31,
2020.
David W.
Perkins,
Specialist in
Macroeconomic
Policy
Darryl Getter,
Specialist in
Financial
Economics
Under the Government in the Sunshine Act (5 U.S.C.
§552b), the Fed must provide advanced notice of
meetings, make those meetings open to the public, and
make meetings’ details available to the public, unless
statutory exemptions apply. This section allows the
Federal Reserve Board to conduct closed meetings
without regard to this act based on a written
determination by the chairman of unusual and exigent
circumstances. The Board must keep a record of all
votes at closed meetings.
Authority
terminates the
earliest of (1)
the date the
public health
emergency ends
or (2) the end
of 2020.
Marc Labonte,
Specialist in
Macroeconomic
Policy
Provision
Description
Section 4008.
Debt
Guarantee
Authority
Section 4009.
Temporary
Government In
the Sunshine
Act Relief
Congressional Research Service
CRS Report
R43413, Costs of
Government
Interventions in
Response to the
Financial Crisis: A
Retrospective, by
Baird Webel
and Marc
Labonte
CRS Report
R42787, An
Overview of the
Transaction
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
7
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Sections 3309 through 3318 of Title 5 of the U.S. Code
pertain to certain authorities and rules for civil service
hiring. Section 4010 provides exemptions to these
sections of the Code to allow the Secretary of Housing
and Urban Development, the Securities and Exchange
Commission, and the Commodity Futures Trading
Commission to recruit and appoint candidates to fill
temporary and term appointments upon a determination
that expedited procedures are necessary to respond to
COVID-19.
Exemption
exists until the
earliest of (1)
the date the
public health
emergency ends
or (2) the end
of 2020.
Barbara
Schwemle,
Analyst in
American
National
Government
CRS In Focus
IF11468, Federal
Executive
Agencies: Hiring
Flexibilities for
Emergency
Situations, by
Barbara L.
Schwemle
Section 4011.
Temporary
Lending Limit
Waiver
National banks are generally subject to limits on how
much they can lend to a single borrower relative to their
capital and other balance sheet characteristics, unless the
loan qualifies for an exception. The Office of the
Comptroller of the Currency (OCC) has relatively
narrow authority to approve certain loans for an
exception to the limit. Section 4011 grants the OCC
broad authority to exempt loans when it is in the public
interest.
Authority
terminates the
earlier of (1) the
date the public
health
emergency ends
or (2) the end
of 2020.
David W.
Perkins,
Specialist in
Macroeconomic
Policy
Section 4012.
Temporary
Relief for
Community
Banks
Banks generally face a variety of safety and soundness
requirements regarding how much capital they must
hold to protect against possible losses on their assets.
Capital is a relatively expensive source of funding, and so
requiring higher levels can reduce the amount of lending
banks do. Certain small banks can elect to be subject to
a single, relatively simple—but relatively high—capital
rule called the Community Bank Leverage Ratio (CBLR).
Bank regulators are authorized to set the ratio between
8% and 10%. Currently, it is set at 9%. Section 4012
directs the regulators to lower it to 8% and to give
banks that fall below that level a reasonable grace period
to come back into compliance with the CBLR.
Relief expires
the earlier of (1)
the date the
public health
emergency ends
or (2) the end
of 2020.
David W.
Perkins,
Specialist in
Macroeconomic
Policy
A Troubled Debt Restructuring (TDR) is a concession
by the lender (the creditor) to a troubled borrower that
it would not generally consider under normal
circumstances. Generally Accepted Accounting Principles
(GAAP) require the lender to reflect in its financial
records any potential loss as a result of a TDR.
Recording of such losses could negatively impact the
lender’s ability to meet regulatory requirements. Section
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.
Relief expires
the earlier of (1)
60 days after
the public health
emergency
declaration is
lifted or (2) the
end of 2020.
Raj Gnanarajah,
Analyst in
Financial
Economics
Provision
Description
Section 4010.
Temporary
Hiring
Flexibility
Section 4013.
Temporary
Relief from
Troubled Debt
Restructurings
Congressional Research Service
CRS Report
R45989,
Community Bank
Leverage Ratio
(CBLR):
Background and
Analysis of Bank
Data, by David
W. Perkins
8
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Section 4014.
Optional
Temporary
Relief from
Current
Expected
Credit Losses
Credit loss reserves help mitigate the overstatement of
income on loans and other assets by adjusting for
potential future losses on related loans and other assets.
In response to banks' financial challenges during and after
the 2007-2009 financial crisis, Financial Accounting
Standards Board (FASB) promulgated a new credit loss
standard—Current Expected Credit Loss (CECL)—in
June 2016. CECL requires early recognition of losses as
compared to the current methodology. All public
companies were required to issue financial statements
that incorporated CECL for reporting periods beginning
December 15, 2019. This provision gives banking
institutions, including credit unions, the option to
temporarily delay CECL implementation.
Congressional Research Service
Effective
Dates
CRS Experts/
Resources
Delay of CECL
implementation
until the earlier
of (1) the date
the public health
emergency ends
or (2) the end
of 2020.
Raj Gnanarajah,
Analyst in
Financial
Economics
CRS Report
R45339,
Banking: Current
Expected Credit
Loss (CECL), by
Raj Gnanarajah
9
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Treasury’s Exchange Stabilization Fund (ESF) was
originally created to stabilize the dollar exchange rate. In
2008, the ESF was used to guarantee U.S. money market
mutual funds to stop a run on money markets. Section
131 of the Emergency Economic Stabilization Act of
2008 (P.L. 110-343) prohibited the use of the ESF to
guarantee money markets in the future. Section 4015
temporarily suspends that prohibition to permit a
guarantee and appropriate any funds paid out from the
ESF in excess of fees under the guarantee.
Guarantee
terminates
December 31,
2020
Marc Labonte,
Specialist in
Macroeconomic
Policy
Baird Webel,
Acting Section
Research
Manager
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 temporarily enhances access to the Central
Liquidity Facility (CLF) for corporate credit unions to
meet liquidity needs as long as they have made
reasonable efforts to first use primary sources of
liquidity, such as their balance sheets and market funding
sources. Section 4016 also increases resources available
to meet liquidity needs through the facility by
temporarily expanding the ability to borrow to a value
16 times the subscribed capital stock and surplus of the
CLF (up from the statutory limit of 12 times).
Increase in CLF
borrowing
threshold is
effective on date
of enactment,
expires
December 31,
2020.
Darryl Getter,
Specialist in
Financial
Economics
Provision
Description
Section 4015.
NonApplicability of
Restrictions on
ESF During
National
Emergency
Section 4016.
Temporary
Credit Union
Provisions
Congressional Research Service
10
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Section 4017.
Increasing
Access to
Materials
Necessary for
National
Security and
Pandemic
Recovery
Title III of the Defense Production Act (DPA; 50 U.S.C.
§§4501 et seq.) allows the President to incentivize the
domestic industrial base to expand the production and
supply of critical materials and goods. Section 4017
waives certain congressional oversight and reporting
requirements under Title III of the DPA. Although the
bulk of DPA authorities are made available at the
President’s discretion, Title III requires an act of
Congress for purchases or loans made to expand
productive capacity in promotion of the national defense,
broadly defined, for amounts greater than $50 million,
and written notifications made to the relevant
congressional committees of jurisdiction—the Senate
Committee on Banking, Housing, and Urban Affairs, and
the House Committee on Financial Services—at least 30
days in advance.
Congressional Research Service
Effective
Dates
CRS Experts/
Resources
Effective upon
enactment;
some provisions
exists for two
years, and
others for one
year.
Michael Cecire,
Analyst in
Intergovernmental
Relations and
Economic
Development
Policy
Heidi Peters,
Analyst in U.S.
Defense
Acquisition
Policy
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
11
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Section 4018 establishes a Special Inspector General for
Pandemic Recovery (SIGPR). The SIGPR is appointed by
the President with the advice and consent of the Senate
as soon as is practicable after activity under Section 4003
begins. The nomination is made based on integrity and
relevant subject matter expertise. The SIGPR is subject
to removal by the President subject to the congressional
notification requirements in Section 3(b) of the Inspector
General Act of 1978.
The SIGPR is tasked with conducting audits and
investigations of the Treasury Secretary’s activities under
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.
SIGPR will
terminate 5
years after
enactment.
Report to
Congress due
within 60 days
of SIGPR
appointment,
and quarterly
thereafter.
Ben Wilhelm,
Analyst in
Government
Organization
and
Management
Section 4019.
Conflicts of
Interest
Section 4019 establishes that certain entities are
ineligible to participate in Section 4003 transactions. An
ineligible entity is a covered individual who owns a
controlling interest in that entity (defined as “not less
than 20 percent, by vote or value, of the outstanding
amount of any class of equity interest in an entity”).
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.
n/a
(See Section
4003)
Ben Wilhelm,
Analyst in
Government
Organization
and
Management
Section 4020.
Congressional
Oversight
Commission
Section 4020 establishes a congressional commission to
conduct oversight of the Fed’s and Treasury’s
implementation of Title IV provisions. The commission
must submit reports on the use of the authorities
granted to the agencies under these provisions and the
impact and effectiveness of the loans, guarantee
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
Oversight
Commission
terminates
September 30,
2025.
Ben Wilhelm,
Analyst in
Government
Organization
and
Management
Provision
Description
Section 4018.
Special
Inspector
General for
Pandemic
Recovery
Congressional Research Service
12
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Consumers can harm their credit scores when they miss
consumer loan payments, which can impact future access
to credit. Section 4021 requires data furnishers (such as
banks, credit card companies, debt collection agencies,
and other companies that process financial information)
during the COVID-19 pandemic covered period to
report to the credit bureaus that consumers 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 and fulfil those
requirements, provided they were current before this
period. If the consumer was delinquent before the
covered period, then the furnisher should maintain the
delinquent status unless the consumer brings the
account or obligation current.
Covered period
begins January
31, 2020, and
ends the later of
(I) 120 days
after enactment,
or (II) 120 days
after the
national
emergency
declared by the
President on
March 13, 2020
terminates.
Cheryl Cooper,
Analyst in
Financial
Economics
Darryl Getter,
Specialist in
Financial
Economics
Section 4022 gives consumers the right to request a
forbearance (temporary reprieve from loan payments)
and it provides a moratorium on foreclosures on loans
that are either (1) mortgages or reverse mortgages
insured by the Federal Housing Administration (FHA) or
guaranteed under provisions of the National Housing
Act (12 U.S.C. §§1707 et seq., 12 U.S.C. §1715z-20); (2)
guaranteed under section 184 or 184A programs for
eligible tribal members and Native Hawaiians,
respectively, pursuant to the Housing and Community
Development Act (12 U.S.C. §§1715z-13a and 1715z13b); (3) loans guaranteed or insured by either the
Department of Veterans Affairs or (including those made
by) Department of Agriculture; or (4) loans purchased
or securitized by Freddie Mac or Fannie Mae (the GSEs).
Forbearance could be granted for up to 180 days, and
could be extended up to 180 days, without accruing fees,
penalties, or interest beyond the amounts scheduled for
regular payments. Servicers would need to notify
borrowers of their right to request forbearance.
Additionally, servicers would not be allowed to initiate a
foreclosure process (judicial or non-judicial) for a 60-day
period beginning March 18, 2020.
A covered
period is not
defined for this
section.
Forbearance can
be granted for
up to 180 days
and extended
another 180
days.
Foreclosures
(judicial or nonjudicial) banned
for a 60-day
period beginning
March 18, 2020.
Katie Jones,
Analyst in
Housing Policy
Libby Perl,
Specialist in
Housing Policy
Darryl Getter,
Specialist in
Financial
Economics
Andrew Scott,
Analyst in
Financial
Economics
Provision
Description
Section. 4021.
Credit
Protection
During
COVID-19
Section 4022.
Foreclosure
Moratorium
and Consumer
Right to
Request
Forbearance
Congressional Research Service
CRS Report
R44125,
Consumer Credit
Reporting, Credit
Bureaus, Credit
Scoring, and
Related Policy
Issues, by Cheryl
R. Cooper and
Darryl E. Getter
CRS In Focus
IF10126,
Introduction to
Financial Services:
The Housing
Finance System,
by Katie Jones
and N. Eric
Weiss
13
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
CRS Experts/
Resources
Section 4023 allows multifamily borrowers with federally
backed multifamily mortgage loans (see Section 4022),
who were current on payments as of February 1, 2020,
to request forbearance for a period up to 30 days, which
could be extended up to two additional 30-day periods.
Any borrower receiving forbearance under this
provision would not be allowed to initiate any eviction
action or charge any late fees or other penalties to a
tenant dwelling in the property on the loan. Additionally,
a borrower who received forbearance would not be
allowed to require a tenant to vacate a dwelling before
30 days after the date the borrower provides notice to
vacate, and a notice to vacate could not be issued until
the expiration of forbearance.
Section 4023
provision expire
the earlier of (1)
the date the
public health
emergency ends
or (2) the end
of 2020.
Forbearance
allowed for a
period up to 30
days, can be
extended up to
two 30-day
periods.
Notice to
vacate banned
until expiration
of forbearance.
Darryl Getter,
Specialist in
Financial
Economics
Section 4024 prohibits eviction actions and fees,
penalties, or other charges to tenants of properties that
participate in covered housing programs (including the
public housing, Housing Choice Voucher, Section 8 and
other project-based rental assistance, rural rental
assistance, and Low-Income Housing Tax Credit
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
agency, such as the FHA or USDA, or one that is sold to
one of the GSEs) for a period of 120 days beginning on
the date of enactment. During this period, lessors of
these units would be banned from issuing a notice to
vacate until after the provision expires, and tenants
would be given an additional 30 days from the issuance
of a notice to vacate.
Evictions
banned upon
enactment for a
period of 120
days.
Katie Jones,
Analyst in
Housing Policy
Libby Perl,
Specialist in
Housing Policy
Section 4025 prohibits any federal entity from
conditioning the issuance of a loan or loan guarantee
under provisions in Section 4003 on an air carrier’s or
eligible business’s implementation of measures to enter
into negotiations with the certified bargaining
representative of a craft or class of employees of the air
carrier or eligible business under the Railway Labor Act
(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.
Provisions
remain in effect
until one year
after the loan or
loan guarantee
is no longer
outstanding.
Provision
Description
Section 4023.
Forbearance of
Residential
Mortgage Loan
Payments for
Multifamily
Properties
with Federally
Backed Loans
Section 4024.
Temporary
Moratorium
on Eviction
Filings
Section 4025.
Protection of
Collective
Bargaining
Agreement
Congressional Research Service
CRS Report
RL34591,
Overview of
Federal Housing
Assistance
Programs and
Policy, by Maggie
McCarty, Libby
Perl, and Katie
Jones
Rachel Tang
14
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Section. 4026.
Reports
Section 4026 requires the Treasury Secretary to publish
a description of any assistance to passenger air carriers,
cargo air carriers, and businesses critical to national
security under Section 4003(b) on its website within 72
hours. Additionally, the provision requires Treasury to
provide reports to Congress and the President, pursuant
to 31 U.S.C. §5302(c), on those Section 4003(b)
activities and publish them. Treasury is also obligated to
publish summaries of the loan and guarantee programs
outstanding every 30 days. The provision requires the
Treasury Secretary and the Fed Chair to testify quarterly
to Congress on the obligations and activities pursuant to
this act.
The provision also requires the Treasury to post on its
website criteria and guidelines for applications to, as well
as contracts associated with, loans and guarantees made
pursuant to this act. Treasury is required to publish a
report every 14 days for the year following enactment,
and every 30 days thereafter, summarizing the actions
taken during the period.
Section 4026 requires the Fed to provide reports in
accordance with 12 U.S.C. §343(3)(C)(i) to Congress
within 7 days of authorizing a new facility or other
assistance. Additionally, the Fed is to provide reports to
Congress on outstanding loan and guarantee programs
every 30 days These reports are to be publicly released
within 7 days of delivery to Congress.
Section 4026 also requires the Government
Accountability Office (GAO) to conduct a study on the
loans, loan guarantees, and other investment programs
under Section 4003, and provide a report to several
House and Senate committees within 9 months of
enactment, and annually through the year succeeding the
last year that loans or guarantees are outstanding.
Congressional Research Service
Effective
Dates
CRS Experts/
Resources
Treasury must
publish: a
description of
assistance on its
website within
72 hours; a
report every 14
days for 1 year
following
enactment, and
every 30 days
thereafter,
summarizing
actions in that
period; and loan
and guarantee
programs
summaries
every 30 days.
The Fed must
report to
Congress within
7 days of
authorizing a
new facility or
other
assistance.
Treasury
Secretary and
the Fed must
testify to
Congress
quarterly.
GAO must
provide a
report within 9
months of
enactment and
annually
throughout the
year succeeding
the last year of
outstanding
loans and
guarantees.
Ben Wilhelm,
Analyst in
Government
Organization
and
Management
15
Title IV Provisions of the CARES Act (P.L. 116-136)
Provision
Description
Section 4027.
Direct
Appropriation
$500 billion is appropriated to the ESF to carry out the
subtitle (see Section 4015 for a description).
Effective
Dates
CRS Experts/
Resources
Any funds
remaining at the
beginning of
2021 may only
be used for
outstanding
assistance. Any
funds remaining
at the beginning
of 2026 are to
be returned and
used for deficit
reduction.
Marc Labonte,
Specialist in
Macroeconomic
Policy
CRS In Focus
IF11474,
Treasury’s
Exchange
Stabilization Fund
and COVID-19,
by Marc
Labonte, Baird
Webel, and
Martin A. Weiss
Section 4028.
Rule of
Construction
Assistance must be in compliance with the terms and
conditions of the subtitle, including that assistance is in
the interest of the federal government.
n/a
Marc Labonte,
Specialist in
Macroeconomic
Policy
Section 4029.
Termination of
Authority
Section 4029 terminates the authorities provided under
Subtitle A to make new loans, guarantees, and other
investments after December 31, 2020. Outstanding
loans, guarantees, and investments after this date would
be allowed to be modified, restructured, or amended,
but not forgiven. The duration of these activities made
under Section 4003(b)(1) that is modified, restructured,
or amended, would not be allowed to extend beyond 5
years of the origination of the loan or guarantee.
Subtitle A
authorities
terminate
December
2020; loans and
guarantees
cannot extend
beyond 5 years
of origination.
Andrew Scott,
Analyst in
Financial
Economics
Marc Levinson,
Section
Research
Manager
Subtitle B—Air Carrier Worker Support
Section 4111.
Definitions
Defines the terms airline catering employee, airline catering
services, contractor (as related to airline catering or air
carrier services), and employee. These definitions are
applied in subsequent sections of Subtitle B to determine
which individuals are eligible for air carrier worker
support.
n/a
Section 4112.
Pandemic
Relief for
Aviation
Workers
Directs the Treasury Secretary to provide $25 billion to
continue payment of employee wages, salaries, and
benefits at passenger air carriers; $4 billion for similar
purposes at cargo air carriers; and $3 billion for
employees of contractors that perform catering
functions for air carriers or on-airport work directly
related to air transportation of persons, property, or
mail.
n/a
Congressional Research Service
16
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
Provision
Description
Section 4113.
Procedures for
Providing
Payroll
Support
Directs the Treasury Secretary to provide individual air
carriers with amounts equal to the amount of salaries
and benefits paid from April 1, 2019, through September
30, 2019, and to contractors on a similar basis. Requires
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.
n/a
Section 4114.
Required
Assurances
Prohibits air carriers and contractors that receive
financial assistance, and their affiliates, from conducting
involuntary furloughs or from reducing rates of pay and
benefits until September 30, 2020, and from
repurchasing shares and paying dividends through
September 30, 2021. Authorizes the Transportation
Secretary through March 1, 2022, to require air carriers
receiving financial assistance to maintain service to any
point served before March 1, 2020, as the Secretary
deems necessary.
Workforce
restrictions in
effect until
September 30,
2020;
restrictions on
stock buyback
and dividends
until September
30, 20201;
authority to
maintain service
expires March
1, 2022.
Section 4115.
Protection of
Collective
Bargaining
Agreement
Prohibits the Treasury Secretary from conditioning
assistance to air carriers or contractors on agreement to
enter negotiations with a labor union under the Railway
Labor Act or the National Labor Relations Act.
n/a
Section 4116.
Limitation on
Certain
Employee
Compensation
Requires air carriers or contractors seeking assistance to
enter agreements with the Treasury Secretary providing
that between March 24, 2020, and March 24, 2022, no
officer or employee whose compensation exceeded
$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.
Covered period
from March 24,
2020 to March
24, 2022.
Section 4117.
Stock
Warrants
Authorizes the Treasury to receive stock warrants,
options, preferred stock, debt securities, notes, or other
financial instruments that “provide appropriate
compensation to the Federal Government for the
provision of financial assistance.”
n/a
Section 4118.
Reports
Requires the Treasury Secretary to submit to Congress
a report on financial assistance to air carriers and
contractors.
Report due to
Congress by
November 1,
2020, and again
one year
following
enactment.
Congressional Research Service
CRS Experts/
Resources
17
Title IV Provisions of the CARES Act (P.L. 116-136)
Effective
Dates
Provision
Description
Section 4119.
Coordination
Directs the Treasury Secretary to coordinate with the
Transportation Secretary in implementing these
provisions.
n/a
Section 4120.
Direct
Appropriation
Appropriates $32 billion to carry out Sections 41114119.
n/a
CRS Experts/
Resources
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/coronavirusdisease-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
Analyst in Financial Economics
/redacted/@crs.loc.gov
, 7-....
Maggie McCarty
Specialist in Housing Policy
/redacted/@crs.loc.gov , 7-....
Michael H. Cecire
Analyst in Intergovernmental Relations and
Economic Development Policy
r/ edacted /@crs.loc.gov
, 7-....
David W. Perkins
Specialist in Macroeconomic Policy
/redacted/@crs.loc.gov, 7-....
Cheryl R. Cooper
Analyst in Financial Economics
/redacted/@crs.loc.gov , 7-....
Barbara L. Schwemle
Analyst in American National Government
/redacted/@crs.loc.gov , 7-....
Darryl E. Getter
Specialist in Financial Economics
/redacted/@crs.loc.gov
, 7-....
Gary Shorter
Specialist in Financial Economics
r/ edacted/@crs.loc.gov, 7-....
Raj Gnanarajah
Analyst in Financial Economics
/redacted/@crs.loc.gov , 7-....
Eva Su
Analyst in Financial Economics
/redacted/@crs.loc.gov
, 7-....
Katie Jones
Analyst in Housing Policy
/redacted/@crs.loc.gov, 7-....
Rachel Y. Tang
Analyst in Transportation and Industry
/redacted/@crs.loc.gov
, 7-....
Marc Labonte
Specialist in Macroeconomic Policy
r/ edacted/@crs.loc.gov , 7-....
Ben Wilhelm
Analyst in Government Organization and
Management
/redacted/@crs.loc.gov , 7-....
Marc Levinson
Section Research Manager
r/ edacted/@crs.loc.gov , 7-....
Congressional Research Service
R46301 · VERSION 1 · NEW
19
EveryCRSReport.com
The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the
Library of Congress, charged with providing the United States Congress non-partisan advice on
issues that may come before Congress.
EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The
reports are not classified, and Members of Congress routinely make individual reports available to
the public.
Prior to our republication, we redacted phone numbers and email addresses of analysts who
produced the reports. We also added this page to the report. We have not intentionally made any
other changes to any report published on EveryCRSReport.com.
CRS reports, as a work of the United States government, are not subject to copyright protection in
the United States. Any CRS report may be reproduced and distributed in its entirety without
permission from CRS. However, as a CRS report may include copyrighted images or material from a
third party, you may need to obtain permission of the copyright holder if you wish to copy or
otherwise use copyrighted material.
Information in a CRS report should not be relied upon for purposes other than public
understanding of information that has been provided by CRS to members of Congress in
connection with CRS' institutional role.
EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim
copyright on any CRS report we have republished.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.