Financial Industry Alert
When we last wrote, we advised that the CARES Act’s provisions granting extraordinary power to the Secretary of the Treasury to determine those businesses’ eligible for financial relief without legislative oversight was likely to be a significant point of contention during legislative negotiations over approval of the Senate Bill. Our prediction proved correct, with passage of the Bill being delayed for several days through procedural measures. Recent reports have indicated that Secretary Mnuchin has agreed to strict legislative oversight over his authority to designate eligible businesses entitled to receive funding, which has increased in the aggregate from $150 billion to $500 billion in aid for corporations and municipalities. The agreement purportedly also includes hundreds of billions of dollars in funding for hospitals - a significant increase from the Bill’s initial allocation.
The House of Representatives has drafted its own 1,400 page economic relief package that increases total funding to $2.5 trillion and purports to direct more relief to individuals who are in need of assistance, while subjecting aid to large businesses to conditions not clearly relevant to addressing problems posed by the coronavirus, such as eliminating highly polluting aircraft and establishing a national minimum wage. Although many in policy circles view the need for economic relief with increasing urgency, it remains to be seen whether the Congress’s competing proposals will result in pragmatic solutions that avert damage to the economy that otherwise might be avoidable or mitigated. Recent statements by Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi indicate that a revised compromise bill may be set for approval by each house of Congress as early as this afternoon, and President Trump has registered his support for recent negotiations.