In March Congress passed the CARES Act. The act enabled the Treasury to hand over $454 billion of taxpayers’ money to the Federal Reserve. The Fed, in turn, was to leverage the money by 10 times to approximately $4.54 trillion to keep the economy moving, credit flowing, workers employed and businesses alive until the pandemic had been brought under control. But, in the seven months that have gone by the Treasury has handed only $114 billion of the $454 billion to the Fed. What has happened with the other $340 billion allocated by Congress?
In the seven months that have elapsed 97,966 businesses have permanently closed. Could some have been saved with some of the $340 billion? One problem with the plan is that the act established a minimum loan amount. A business has to borrow at least $250,000, which, for many small businesses is a heck of a lot of money. The minimum is not a burden for others. Why haven't they gotten some?
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