“Given the country’s record unemployment rates, the Select subcommittee is looking into why it took the Treasury Department and the Fed so long to implement the Main Street Lending Program, and why the Treasury Department and the Fed decided to give big business priority over protecting small businesses and American companies to give jobs, “he said.
Clyburn requested documents by August 20 to answer his questions about the design of the program, including “all communications between the Treasury Department and the Fed on the terms of the Main Street Lending Program.” POLITICO and other media outlets have reported that the Treasury Department has been more cautious with risk than the Fed.
That criticism comes as the Congressional Oversight Commission is due to hold a hearing on the loan program on Friday.
Efforts on Main Street are also being repulsed by its excessive restriction as the program has got off to a slow start.
Data released Thursday shows that the Fed held $ 95 million in loans under the program as of Wednesday. The central bank also released transaction-level data for the eight loans issued through July 27, six of which were granted by the same bank: the City National Bank of Florida.
Four Republican Senators, in a letter received from POLITICO on Tuesday, called on Powell and Mnuchin to make a number of changes to make the program easier for companies to access, including allowing companies with higher debt.
“To be clear: We support the use of the [Main Street lending program] to provide our economy with ‘rescue capital’, “the letter says, signed by Sens. Kelly Loeffler (R-Ga.), John Cornyn (R-Texas), Mike Braun (R-Ind.) and Thom Tillis ( RN. C.).
They also suggested making the prospect of Main Street lending more attractive to banks by, for example, abolishing the requirement that banks bear some risk by allowing the Fed to assume initial losses up to a certain percentage or allowing lenders to to collect a larger part of the interest loans.
The Senators also asked for feedback on whether the law needed to be changed to allow the agencies to charge a lower interest rate since the Federal Reserve Act requires the central bank to charge a “penalty”.
Zachary Warmbrodt contributed to this report.