Some $454 billion allocated for the federal government's COVID-19 response remains unused, The Wall Street Journal reported on Thursday (Aug. 27).
The paper says that less than $17 billion of the money had been used for loans and less than half was earmarked for related efforts to help struggling businesses and state and local governments. Congress allocated the $454 billion to backstop loans for borrowers reeling from COVID-19.
The funds were allocated in March.
Former Treasury Department official Ernie Tedeschi, who is now an economist at Evercore ISI, told the paper: “Here we are negotiating another fiscal package, and we have this money just sitting there."
The fact that the money hasn't been deployed has frustrated Congressional leaders from both parties, the Journal reports, stating: "Sen. Mike Crapo (R., Idaho) has introduced legislation directing the Treasury to lend more aggressively. Sen. Chuck Schumer (D., N.Y.) wants to repurpose $200 billion for long-term investments in communities of color."
A Treasury Department spokesman told the Journal in an email quoted by the paper: "The extraordinary Federal Reserve response supported by Treasury’s equity capital has played a vital role in restoring liquidity and funding to credit markets, and enhancing the flow of credit to American businesses, households, nonprofit organizations and state and local governments.
“We will continue to monitor the impact of these programs and will not hesitate to act as needed to support the economy."
Beginning soon after the breadth of COVID-19's impact in the United States became clear, President Donald Trump has said that lending to small businesses is a priority of his administration.
Even before the pandemic, some small business owners saw little choice but to borrow from lenders charging rates that in many contexts would be deemed usurious. The use of lenders other than banks has also drawn scrutiny in the United Kingdom.