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The Twenty-Fifth Report of the Congressional Oversight
Commission

May 31, 2022
Commission Members
U.S. Representative French Hill
U.S. Senator Pat Toomey

TABLE OF CONTENTS
Introduction
Treasury and Federal Reserve Recent Developments

INTRODUCTION
This is the twenty-fifth report of the Congressional Oversight Commission
(“Commission”) created by the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”). 1 The Commission’s role is to conduct oversight of the implementation of
Division A, Title IV, Subtitle A of the CARES Act (“Subtitle A”) by the U.S. Department of
the Treasury (“Treasury”) and the Board of Governors of the Federal Reserve System
(“Federal Reserve”). Subtitle A provided $500 billion to the Treasury for lending and other
investments “to provide liquidity to eligible businesses, States, and municipalities related to
losses incurred as a result of coronavirus.” 2
Of this amount, $46 billion was set aside for the Treasury to provide loans or loan
guarantees to certain types of companies. Up to $25 billion was available for passenger air
carriers, eligible businesses certified to inspect, repair, replace, or overhaul services, and ticket
agents. Up to $4 billion was available for cargo air carriers, and $17 billion was available for
businesses “critical to maintaining national security.” 3
The CARES Act charges the Commission with submitting regular reports to Congress on:
•

The Federal Reserve’s use of its authority under Subtitle A, including the use
of contracting authority and administration of the provisions of Subtitle A.

•

The impact of loans, loan guarantees, and investments made under Subtitle A on
the financial well-being of the U.S. economy.

•

The extent to which the information made available on transactions under Subtitle A
has contributed to market transparency.

•

The effectiveness of loans, loan guarantees, and investments made under Subtitle A
in minimizing long-term costs to the taxpayers and maximizing the benefits for
taxpayers. 4

In its first report to Congress on May 18, 2020, the Commission stated that it
is responsible for answering two basic questions:
•

What are the Treasury and the Federal Reserve doing with $500 billion of
taxpayer money?

CARES Act, Pub. L. No. 116-136, § 4020, 134 Stat. 281 (2020).
Id. § 4003(a).
3
Id. § 4003(b). In addition, Division A, Title IV, Subtitle B of the CARES Act (“Subtitle B”) authorized the
Treasury to provide up to $32 billion in financial assistance to passenger air carriers, cargo air carriers, and certain
airline industry contractors that must be exclusively used for the continuation of payment of employee wages,
salaries, and benefits. Subtitle B is not within the jurisdiction of the Commission.
4
Id. § 4020.
1
2

•

Who is that money helping? 5

The emergency lending facilities established by the Federal Reserve that received
CARES Act funds are:
Primary Market Corporate Credit Facility (“PMCCF”) and Secondary Market
Corporate Credit Facility (“SMCCF”): Through a special purpose vehicle (“SPV”), the
PMCCF enabled the Federal Reserve to purchase newly issued corporate bonds and
portions of syndicated loans, and the SMCCF enabled the Federal Reserve to purchase
previously issued corporate bonds and exchange-traded funds (“ETFs”) that invest in
corporate bonds. 6 The PMCCF never made any purchases during the period it was
operational. 7 As of September 1, 2021, the SMCCF completed its planned wind down
with the SMCCF holding zero ETF securities and zero individual bonds. 8
Main Street Lending Program (“MSLP”): The MSLP is comprised of five
facilities—three dedicated to for-profit businesses and two dedicated to non-profit
organizations. The Federal Reserve, through an SPV, acquired loans issued by
lenders to small and medium-sized businesses and non-profit organizations with up
to 15,000 employees or 2019 revenues of $5 billion or less. As of May 25, 2022, the
Federal Reserve held $13.9 billion in loan participations purchased under the
MSLP. 9
Municipal Liquidity Facility (“MLF”): The MLF enabled the Federal Reserve, through
an SPV, to purchase short-term notes issued by state and local governments. As of May
25, 2022, the MLF had $2.9 billion in outstanding purchases of municipal notes. 10
Term Asset-Backed Securities Loan Facility (“TALF”): The Federal Reserve
established TALF to support the flow of credit to consumers and businesses and to
Congressional Oversight Commission, Questions About the CARES Act’s $500 Billion Emergency Economic
Stabilization Funds, May 18, 2020, at 5, https://coc.senate.gov/sites/default/files/202008/20200518_Congressional_Oversight_Committee_1st_Report.pdf.
6
Board of Governors of the Federal Reserve System, Primary Market Corporate Credit Facility Term Sheet, Jul. 28,
2020, https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a9.pdf; Board of Governors
of the Federal Reserve System, Secondary Market Corporate Credit Facility Term Sheet, Jul. 28, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a1.pdf.
7
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, May 10, 2022,
https://www.federalreserve.gov/publications/files/13-3-report-20220511.pdf.
8
Board of Governors of the Federal Reserve System, Statistical Release H.4.1: Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, May 26, 2022, at n.4,
https://www.federalreserve.gov/releases/h41/. The SPV for the SMCCF is the Corporate Credit Facilities LLC. The
SPV for the MSLP is MS Facilities LLC. The SPV for the MLF is Municipal Liquidity Facility LLC.
9
Id.
10
Id.
5

generally improve the market conditions for asset-backed securities (“ABS”). 11
TALF’s purpose was to enable the issuance of ABS backed by student loans, auto
loans, credit card loans, loans guaranteed by the Small Business Administration,
leveraged loans, commercial mortgages, and certain other assets. 12 TALF had a total
outstanding amount of $1.1 billion in loans as of May 25, 2022. 13
are:

The direct lending programs managed by the Treasury that received CARES Act funds
Treasury Loans for National Security Businesses: The Treasury had $17 billion available
to make loans to businesses critical to maintaining national security under Subtitle A. The
Treasury provided national security loans to eleven businesses, totaling $735.9 million.14
One business, Yellow Corporation (“Yellow”), which was formerly known as YRC
Worldwide, Inc. (“YRC”), accounted for 95% of the total loans. 15
Treasury Loans for the Airline Industry: In addition, the Treasury had $29 billion
available to make loans to the airline industry under Subtitle A, with $25 billion available
for passenger air carriers, including related businesses, and $4 billion available for cargo
air carriers. 16 The Treasury agreed to lend $21.2 billion across twenty-four such loans to
companies the Treasury characterized as airlines, ticket agents, a repair station, and a
cargo air carrier. 17

In this report, we provide updates regarding recent key actions taken by the Treasury
and the Federal Reserve regarding each of the above lending programs and facilities under
Subtitle A, as well as updates regarding the Commission’s oversight activities.

Federal Reserve, Term Asset-Backed Securities Loan Facility Term Sheet, Jul. 28, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200728a6.pdf.
12
Id.
13
Board of Governors of the Federal Reserve System, Statistical Release H.4.1: Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, May 26, 2022, at n.4,
https://www.federalreserve.gov/releases/h41/.
14
U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited May 31, 2022, https://home.treasury.gov/policy-issues/coronavirus/assistance-for-industry/loans-to-aircarriers-eligible-businesses-and-national-security-businesses.
15
Yellow Corporation, YRC Worldwide Inc. is Renamed Yellow Corporation, Feb. 4, 2021,
https://investors.myyellow.com/news-releases/news-release-details/yrc-worldwide-inc-renamed-yellow-corporation.
16
CARES Act § 4003. Related businesses are eligible businesses that are certified under part 145 of title 14, Code of
Federal Regulations, and approved to perform inspection, repair, replace, or overhaul services, and ticket agents (as
defined in Section 40102 of Title 49 of the United States Code).
17
U.S. Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security Businesses,
last visited May 31, 2022, https://home.treasury.gov/policy-issues/coronavirus/assistance-for-industry/loans-to-aircarriers-eligible-businesses-and-national-security-businesses.
11

TREASURY AND FEDERAL RESERVE RECENT DEVELOPMENTS
As of January 8, 2021, all emergency lending programs created by the Treasury and the
Federal Reserve under Section 4003 of the CARES Act have ceased operations. On December
21, 2020, Congress passed new COVID-relief legislation in the Consolidated Appropriations
Act, 2021, Pub. L. No. 115-260. In that legislation, Congress prohibited the Federal Reserve’s
CARES Act lending facilities from being restarted or replicated without congressional
approval, and it rescinded the remaining unobligated balance of the $500 billion previously
made available under Section 4003 of the CARES Act for emergency lending programs. 18
We summarize below the outstanding amounts of credit extended by each facility and
other key developments.
Primary Market Corporate Credit Facility (“PMCCF”)
The PMCCF ceased operations on December 31, 2020. The PMCCF did not engage
in any transactions during the period in which it was operational. 19
Secondary Market Corporate Credit Facility (“SMCCF”)
The SMCCF ceased operations on December 31, 2020. As of its closure, the SMCCF
invested in 16 bond ETFs with a market value of $8.8 billion. 20 As of its closure, the SMCCF
also had purchased individual corporate bonds from 557 different issuers, with the market value
of outstanding individual bond holdings totaling $5.5 billion.21 As of September 1, 2021, the
SMCCF held zero ETF securities and zero in individual bond purchases. 22
On June 2, 2021, the Federal Reserve announced plans to begin winding down the
SMCCF’s portfolio of bond ETFs and individual corporate bonds. 23 On June 10, 2021, the
Federal Reserve briefed the Commission on its plan to sell the SMCCF’s holdings. The Federal
Reserve noted it intended to take into account daily liquidity and trading conditions for ETFs and
corporate bonds to minimize the potential for any adverse impact on market functioning when
Consolidated Appropriations Act, 2021, Pub. L. No. 115-260, Division N, Title X, § 1003, 134 Stat. 1182.
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, May 10, 2022,
https://www.federalreserve.gov/publications/files/13-3-report-20220511.pdf.
20
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Oct. 13
2021, https://www.federalreserve.gov/publications/files/smccf-transaction-specific-disclosures-10-13-21.xlsx.
21
Id.
22
Id.
23
Board of Governors of the Federal Reserve System, Federal Reserve Board announces plans to begin winding
down the portfolio of the Secondary Market Corporate Credit Facility, Jun. 2, 2021,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20210602a.htm.
18
19

executing the planned sales. The Federal Reserve stated its goal was to complete the sale of the
SMCCF’s assets by December 31, 2021. As of September 1, 2021, SMCCF has completed its
planned wind down with the SMCCF holding zero ETF securities and zero individual bonds. 24
Main Street Lending Program (“MSLP”)
The MSLP ceased operations on January 8, 2021. The MSLP purchased 1,830 loan
participations while it was operational, totaling $16.6 billion,25 representing 2.8% of its original
$600 billion lending capacity. 26 As of April 30, 2022, the MSLP had a balance of $14.1 billion in
loan participations, with an estimated loan loss allowance that decreased to $1.9 billion, down
from previous estimate of $2.0 billion. 27
Every MSLP loan matures in 2025. 28 This introduces risk to the taxpayer, as the MSLP
will be dependent on market conditions in 2025. To mitigate the above risk, the Federal Reserve
monitors credit quality based on borrower information provided to it. The terms of the MSLP
participation agreement require the borrower to provide the MSLP with certain financial
information quarterly and annually, as well as any material developments. The Federal Reserve,
with the assistance of a third-party vendor, reviews and analyzes this information and uses it to
develop an internal credit score for MSLP loans. As seen in the table below, the evaluation of
loan participations purchased by the MSLP resulted in a loan loss allowance in the amount of
$1.9 billion as of April 30, 2022, equivalent to 13.4% of the $14.1 billion loan participations’
balance. 29 As of April 30, 2022, MSLP has recognized approximately $32 million in loan
losses. 30 For context, the Small Business Administration’s 7(a) Loan Program that targets small
businesses has experienced cumulative defaults of 10% to 28% throughout the life of the loans,
with loans that were originated in the lead-up to the 2007 financial crisis experiencing 30% to
40% of defaults. 31
Board of Governors of the Federal Reserve System, Statistical Release H.4.1: Factors Affecting Reserve Balances
of the Depository Institutions and Condition Statement of Federal Reserve Banks, Sep. 2, 2021, at n.4,
https://www.federalreserve.gov/releases/h41/.
25
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Feb. 8
2021, https://www.federalreserve.gov/publications/files/mslp-transaction-specific-disclosures-02-09-21.xlsx.
26
Board of Governors of the Federal Reserve, Federal Reserve takes additional actions to provide up to $2.3 trillion
in loans to support the economy, Apr. 9, 2020,
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
27
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, May 10, 2022,
https://www.federalreserve.gov/publications/files/13-3-report-20220511.pdf.
28
Id.
29
Id.
30
Id.
31
S&P Global, Small Business ABS Credit Quality Hinges on Pandemic Duration and Stimulus Efficacy, Apr. 28,
2020, https://www.spglobal.com/ratings/en/research/articles/200428-small-business-abs-credit-quality-hinges-onpandemic-duration-and-stimulus-efficacy-11467182.
24

Loan Loss
Reserve

Portfolio
Balance

Loan Loss
% of Total
Portfolio

Actual
Losses

April 30, 2022

$1.9 billion

$14.1 billion

13.4%

$32 million

March 31, 2022

$2.0 billion

$14.6 billion

13.7%

$23 million

December 31, 2021

$2.3 billion

$15.5 billion

14.9%

$17 million

March 31, 2021

$2.4 billion

$16.5 billion

14.5%

Date as of

Municipal Liquidity Facility (“MLF”)
The MLF ceased operations on December 31, 2020. During its period of operation, the
MLF purchased a total of four notes from just two borrowers—the State of Illinois and New
York City’s Metropolitan Transportation Authority (“MTA”). These notes totaled $6.6 billion,
representing 1% of the MLF’s original $500 billion lending capacity. 32 As of April 30, 2022, the
Federal Reserve held $2.9 billion of outstanding asset purchases. 33
The MLF has one remaining municipal note that matures in 2023, exposing the taxpayer
to the risk of market conditions in 2023.34 To mitigate this risk, the Federal Reserve reviews the
MLF municipal note investments on a quarterly basis to identify investments that have
indications of possible credit impairment. In addition, the Federal Reserve’s modeling of
portfolio performance includes an evaluation of the municipal note portfolio performance under
stress conditions. As of April 30, 2022, the Federal Reserve does not expect any losses in the
MLF portfolio. 35
Term Asset-Backed Securities Loan Facility (“TALF”)
TALF ceased operations on December 31, 2020. During its period of operation, the
TALF made 224 loans totaling $4.4 billion to 20 investment funds, representing 4% of TALF’s

original $100 billion lending capacity. 36 While TALF only issued $4.4 billion in loans,
improvements in the funding markets allowed $304 billion in capital to flow to borrowers in the
ABS markets in 2020. 37
In regards to when TALF loans are scheduled to be repaid, every TALF loan matures in
2023. This introduces risk to the taxpayer as the TALF will be dependent on market conditions
in 2023. That said, many TALF borrowers have elected to prepay their TALF loans, causing the
size of the TALF loan program to contract to a total outstanding amount of $1.2 billion in loans,
as of April 30, 2022. 39
38

To further mitigate taxpayer risk, TALF has recourse to the ABS collateral securing the
loan. TALF annual financial statements note that the fair value of the ABS collateral for each
TALF loan is subject to both market and credit risk, arising from movements in variables such as
interest rates, credit spreads, and the credit quality of the collateral. Lending haircuts applied to
each ABS at the time the loan was originated provide a further layer of protection against loss, as
the loan amount advanced against each ABS was less than the ABS’ value. 40
The Federal Reserve has indicated that TALF loans are evaluated on a quarterly basis for
impairment to determine if the fair value of the collateral is sufficient to repay each loan. Based
on evaluations performed as of December 31, 2021, there were no credit impairments in TALF’s
holdings. 41 The fair value of the collateral is publicly disclosed by the Federal Reserve in its
periodic reports to Congress on TALF. Relative to the $1.2 billion in loans outstanding, the total
value of the collateral pledged to secure the TALF loans to eligible borrowers was $1.3 billion as
of April 30, 2022. 42

Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), Jan. 11,
2021, https://www.federalreserve.gov/publications/files/talf-transaction-specific-disclosures-01-11-21.xlsx.
37
SIFMA, U.S. Asset-Backed Securities Statistics, May 5, 2022, https://www.sifma.org/resources/research/us-assetbacked-securities-statistics/.
38
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act (Transaction-specific Disclosures), May
11, 2022, https://www.federalreserve.gov/publications/files/talf-transaction-specific-disclosures-05-11-22.xlsx.
39
Id.
40
Board of Governors of the Federal Reserve, Financial Statements: TALF II LLC, for the year ended December 31,
2021, and for the period from April 13, 2020 to December 31, 2020, Mar. 21, 2022,
https://www.federalreserve.gov/aboutthefed/files/talfllcfinstmt2021.pdf.
41
Id.
42
Board of Governors of the Federal Reserve System, Periodic Report: Update on Outstanding Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act, May 10, 2022,
https://www.federalreserve.gov/publications/files/13-3-report-20220511.pdf.
36

Treasury Loans for National Security Businesses
The national security loan program made 11 loans totaling $735.9 million. 43 As of May
1, 2022, two companies have repaid their national security loans and $746.7 million of loans
remain outstanding. 44 The Commission’s eighth report and twelfth report featured in-depth
analysis on and recommendations for the program.
The $700 million loan to Yellow (formerly known as YRC) made up a substantial portion
of the program. The Treasury’s loan to Yellow contains two parts (i.e., tranches) that mature on
September 30, 2024. The first tranche of $300 million (“tranche A”) has an interest rate of
London Inter-bank Offered Rate (“LIBOR”) +3.50%. Yellow used the funds to cover, among
other things, healthcare and pension liabilities, real estate and equipment leases, and interest
payments on debt. The second tranche of $400 million (“tranche B”) also has an interest rate of
LIBOR +3.50%. Yellow has been using these funds to finance the purchase of tractors and
trailers in accordance with the company’s capital expenditures plan that must be submitted to,
and approved by, the Treasury. The full $300 million of tranche A of the loan was disbursed
during 2020 and the $400 million tranche B has been disbursed as of July 2021. 45 As additional
security for the Treasury’s loan to Yellow, the Treasury received 15.9 million shares of Yellow’s
common stock as consideration. 46 Based on Yellow’s stock price on May 27, 2022, the value of
the Treasury’s common stock position is approximately $61 million.
The Commission has expressed concerns regarding the Treasury’s process for certifying
Yellow as “critical to maintaining national security” and questioned whether Yellow’s precarious
financial position at the time of the loan exposed taxpayers to a significant risk of loss.
Following a series of correspondence between the Commission, the Treasury, and the Defense
Department, the Commission was better able to understand the decision-making process behind
the “critical to maintaining national security” designation and the rationale for the Treasury loan
to Yellow. However, the Commission was unable to substantiate the assertion the Treasury and
the Defense Department made indicating that Yellow provides 68% of less-than-truckload
(“LTL”) services to the Defense Department, based on materials the Commission received. The
Commission also wanted to understand the role Yellow’s efforts to lobby Congress, the
Treasury, and the Defense Department played in the loan process.
On May 10, 2021, the Commission sent letters to the Secretary of Defense and the
Secretary of the Treasury, requesting additional documents regarding the loan made to Yellow.
The Commission received a response from the Treasury with copies of the letters of support for
U.S. Department of the Treasury, Report Under Section 4026(b)(1)(C) of the CARES Act on Loans to Air
Carriers, Eligible Businesses, and National Security Businesses, May 1, 2022,
https://home.treasury.gov/system/files/136/4026b1CLoanReport05012022.pdf.
44
Id.
45
Yellow Corporation, Second Quarter 2021 Earnings Call, Aug. 4, 2021,
https://investors.myyellow.com/events/event-details/yellow-corporation-2nd-quarter-2021-earnings-call.
46
Yellow Corporation, 2020 Annual Report, Feb. 11, 2021, https://investors.myyellow.com/static-files/c7b4a86dddd4-444b-80e6-0603b6b5876b (see “U.S. Treasury Loan”).
43

Yellow that the Treasury received from members of Congress. The Commission also received a
letter from the Defense Department in response to the Commission’s request.
On October 7, 2021, the Commission sent a letter to the Secretary of Defense and the
Secretary of the Treasury, requesting information about the status of the eleven loans made under
the national security loan program. The Commission received a response from the Treasury with
information relating to the status of the loans and ongoing monitoring of the loan program.
Treasury noted that each one of the borrowers is still in business and one of the borrowers,
Semahtronix LLC, repaid its loan in full on September 17, 2021. Treasury explained that it
requires borrowers to submit data on a quarterly basis as part of its ongoing compliance testing
and asset monitoring. As of November 1, 2021, Treasury expected all of the remaining national
security loan program borrowers to repay their loans on time and Treasury had no plans to
dispose of the loans. The Commission received a letter from the Defense Department in response
to the Commission’s October 7, 2021 request.
On February 28, 2022, the Commission sent letters to the Secretary of Defense and the
Secretary of the Treasury requesting additional documents relating to communications between
their agencies and representatives of Yellow, including lobbyists. The Commission received
documents from the Defense Department and the Treasury in response to this request. The
Commission is currently in the process of reviewing the materials received.
Treasury Loans for the Airline Industry
The Treasury’s airline industry loan program made 24 loans totaling $21.2 billion but
only $1.9 billion of authorized loans were disbursed. 47 As of May 1, 2022, eleven companies
have repaid their loans and $256.0 million in loans remain outstanding. 48 The Commission’s
eleventh report featured in-depth analyses on the program and offered recommendations related
to the program.

U.S. Department of the Treasury, Report Under Section 4026(b)(1)(C) of the CARES Act on Loans to Air
Carriers, Eligible Businesses, and National Security Businesses, May 1, 2022,
https://home.treasury.gov/system/files/136/4026b1CLoanReport05012022.
48
Id.
47

Full text of Congressional Oversight Commission Reports : Twenty-Fifth Report of the Congressional Oversight Commission

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