Senate CARES Act, Covid Response


On Mar. 25, Senate passed CARES Act bill, comprehensive relief.


  • Senate passed Bill S3548, coronavirus aid, relief, and economic security (CARES) act.
  • Address economic impacts of virus; inject $4 trillion in marketplace in secured loans.
  • Follows ongoing negotiation efforts to pass a stimulus and relief package, see, #74382
  • CARES Act Stabilization Fund
  • $500bn to Treasury’s exchange stabilization fund (ESF) to stabilize key US industries.
  • Authorizes Fed to leverage this fund and provide $4 trillion in direct assistance to various industries, cities, states; oversight for large corporations, including by panel.
  • Create independent inspector general and Congressional oversight panel for propriety.
  • Delays due dates for employer payroll taxes, estimated tax payments for corporations.
  • Forgivable bridge loans and funding for grants and technical help for small business.
  • Small Business Loans via SBA
  • Bill contains $10bn dollar emergency grant fund, which commit an advance of $10,000 to small businesses and non-profits, that apply for SBA economic injury disaster loan.
  • Aims to deliver $10,000 advance to loan applicants within three days of its processing.
  • $10,000 grant does not need to be repaid, even if the grantee is subsequently denied.
  • Money can be used widely to provide paid sick leave to employees, payroll, debt, rent.
  • Economic injury disaster loans are SBA loans up to $2mn with interest rate to 3.75% for companies and 2.75% for non-profits, defer principal and interest for up to 4 years.
  • Loan can pay expenses that could have been met had the Covid disaster not occurred.
  • Treasury also making most banks and lending institutions into authorized SBA lenders.
  • Small business can go to bank or loan institution it is doing business to apply for fund.
  • Bill includes $17bn funding relief for small businesses with SBA 7(a), 504 or microloan.
  • SBA will cover all loan payments for existing borrowers, including fees, for six months.
  • This relief will be available to new borrowers to take out a loan in six months after bill.
  • No Fee Loans to Business
  • New stimulus program with nearly $350bn in funding for small businesses, other firms with no fee loans of up to $10mn, which will pay up to eight weeks of average payroll.
  • Firms can borrow up to 125% of payroll, which reflects payroll cost over eight weeks.
  • Use funds to support payroll and can use that additional 25% to cover other expenses.
  • Principal interest will be deferred for up to a year, and all borrower fees will be waived.
  • It is also a loan forgiveness program, so if firm is able to rehire employees, get payroll back up to where it was in Feb. 2020, then the loans can be waived in part or in full.
  • These loans are not administered by the SBA, they're administered directly by banks.
  • These loans have underwriting waived, based on showing you were a viable business.
  • Amount of loan determined by payroll cost at earlier date, before people were laid off.
  • Cash Assistance for Individuals
  • $1,200 tax rebates to individuals, with additional $500 payments per qualifying child. This rebate begins phasing out when incomes over $75,000 ($150k if joint filers).
  • Allow everyone to set up a digital dollar wallet, called a FedAccount, a free bank account that can be used to receive money, make payments, and take out cash.
  • FedAccounts would be available at local banks and US postal service offices.
  • These accounts would also have no account fees or minimum balance requirements.
  • Retirement Plan Relief
  • Provides relief to retirement savers by pausing required minimum distributions (RMDs) from IRAs and 401(k)s for 1 year, and increasing loan limits for those facing hardship.
  • Mutual Fund Stimulus
  • Delivers $100 million in stimulus for the benefit of shareholders in US mutual funds.
  • Money Market Mutual Funds
  • During coronavirus national emergency, CARES Act will allow Treasury to use ESF to guarantee money market mutual funds; limited to the value of shareholder holdings.
  • Legislative History
  • On Mar. 19, 2020, bill S3548 was introduced in Senate; passed Senate yea-nay vote 96-0 on Mar. 25, 2020; House version HR 748 by voice vote on Mar. 27, 2020.
  • House presented it to President Trump, and he signed it into law on Mar. 27, 2020.
  • Senator Statements
  • Combined with the broader CARES Act, about $6 trillion in immediate relief given to severely affected industries, helping stabilize the economy, said Senator Mike Crapo.
  • Senator Brown said this allows every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money.
  • Trade Group Statements
  • On Mar. 25, 2020, ICI expressed approval of CARES Act package in a press release.
  • Mar. 26, 2020 Treasury Statement
  • On Mar. 26, 2020, US Treasury published Secretary Mnuchin's interview on CNBC.
  • Mnuchin said majority of this bill is all about small business and American workers.
  • Mar. 27, 2020 Enactment, Oversight Question
  • On Mar. 27, 2020, White House published signing of CARES Act into law by President.
  • In President's concurrent statement, he characterized oversight provisions in CARES Act as unconstitutional infringements on executive branch, and therefore not binding.
  • Thus, executive will treat new law as not letting special inspector general for pandemic recovery (SIGPR) issue reports to Congress without presidential supervision.
  • SIGPR is within the Treasury Department; will manage audits and investigations of loans and investments made by the secretary of the Treasury under the CARES Act.
  • Act authorizes SIGPR to request information from other government agencies and requires it to report to Congress without delay unreasonable refusals of such requests.
  • Also, some other provisions condition authority of officers to spend or reallocate funds upon consultation with, or the approval of, one or more congressional committees.
  • President said provisions are impermissible forms of congressional aggrandizement.
  • Therefore, his Administration will not treat spending decisions as dependent on prior consultation with congressional committees, or on these committees' approval.
  • Senate democrats call on Treasury to defend the creation of special inspector general.
  • House FSC Chair Waters condemned Trump's signing statement on Covid stimulus bill.
  • Said House FSC committee will closely monitor the implementation of the CARES act.
  • Mar. 28, 2020 Senator Crapo Letter
  • On Mar. 28, 2020, Senator Crapo urged Treasury, Fed to provide quick guidance on Title IV of CARES Act; critical that marketplace understand what programs available.
  • Mar. 29, 2020 Title IV Outline
  • On Mar. 29, 2020, Senate published outline of key Title IV provisions, and resource.
  • Mar. 31, 2020 House FSC Chair Statement
  • On Mar. 31, 2020, House FSC Chair Waters released statement about the CARES Act. Said law has key provisions Democrats fought for, but, legislation is far from sufficient.
  • Waters urged colleagues to immediately begin working on additional legislation to help American families to endure/overcome pandemic and support nation through crisis.
  • Apr. 1, 2020 CARES Act FAQs
  • On Apr. 1, 2020, House released answers to frequently asked questions about the Act.
  • These were Prepared by the majority staff of the House Financial Services Committee.

Regulators House; Senate; US Treasury; White House
Entity Types B/D; Bank; BHC; CNSM; Corp; HF; IA; Ins; SIFI
Reference Gd 4/1/2020; Sp 3/31/2020; PR, 3/29/2020; Lt, PR 3/28/2020; PR 3/27/2020; Sp 3/26/2020; PR 3/25/2020; Bills S3548, HR 748; 3/27/2020; CARES; COVID-19
Functions Financial; Reporting; Risk; Treasury
Countries United States of America
Products Banking; Corporate; Cryptocurrency; Deposits; Fund Mgt; Insurance-Health; Loan; Payments; Securities
Regions Am
Rule Type Final
Rule Date 3/25/2020
Effective Date 3/27/2020
Rule Id 74483
Linked to Rule :74382
Reg. Last Update 4/1/2020
Report Section US Banking

Last substantive update on 04/03/2020