Politics: Who’s getting these hundreds of billions in the government aid? For now, the public may be in the dark.
A potentially even larger gap involves the trillions going out to businesses under the auspices of the Federal Reserve.
The Cares Act and other legislation generally requires the Fed to disclose the loan recipients and the amounts they receive, but there is a significant exemption: the Fed chairman, Jerome H. Powell, may request that the information be kept confidential, meaning only congressional leaders would be given access.
Proponents of withholding the information argue that identifying coronavirus aid recipients could make firms hesitant to apply out of concerns for privacy, especially if they are small. Other needy firms may fear that an aid application, once made public, could be construed as a sign of financial frailty. Restarting the economy requires getting money to businesses quickly, these proponents say, so programs should avoid requirements that discourage applications.
On the other hand, according to critics, if the names of the beneficiaries of the aid are withheld, it will be difficult to gauge how much of the relief money is being wasted, fraudulently obtained or reaching places it was intended to go, experts and watchdog groups say.
“You can only truly measure the success or failure of programs if you know where the money is going,” said Neil Barofsky, the former Inspector General of the bailout in the last financial crisis. “As a matter of basic governance, there should be disclosure of recipients of government bailout money.”
Though most of the $2.2 trillion in spending has yet to begin, disputes already have arisen about who will be responsible for making sure it is done ethically.
The Cares Act requires several layers of oversight: It calls for a special inspector general, a congressional review commission and a “Pandemic Response Accountability Committee,” a group that will be composed of inspectors general armed with enhanced powers to subpoena documents and testimony.
But President Trump already has taken steps that undermine these reviewers. In signing the Cares Act into law, Trump angered some Democrats, who had insisted on oversight measures, by declaring that the special inspector general cannot issue reports to Congress without “presidential supervision,” a constraint that could compromise the watchdog’s independence.
Then on Monday, Trump removed the chairman of the federal panel Congress created to oversee his administration’s handling of the Cares Act. Glenn Fine, who had been the acting Pentagon inspector general, was informed he was being replaced at the Defense Department by Sean W. O’Donnell, currently the inspector general at the Environmental Protection Agency.
Regardless of what happens to the oversight panels, the public disclosure of who receives the trillions in emergency money could play a critical role in the public debate over the programs.
Publishing the recipient information would enable outside groups — not just government-appointed bodies — to check into the spending, said Jordan Libowitz of Citizens for Responsibility and Ethics in Washington, a nonprofit watchdog group.
“We are always going to be in favor of as much transparency as possible in government spending,” he said.
But under the $2.2 trillion spending bill, the requirements for disclosure vary by the type of spending.
For example, one of the best known elements in the bill, which allows the Treasury Department to spend $46 billion to help airlines, air cargo companies and “businesses critical to national security,” requires the Treasury to promptly publish the name of the company getting money, the amount of the loan and the contract.
The Cares Act similarly sets out requirements for the Federal Reserve to disclose information about the loans it offers.
The Fed is required to turn over to Congress — and ultimately put up on the Fed’s website — the basic items of loans issued: the identity of the business, how much money was lent and the interest rate. Later it will disclose how much of the loan has been repaid.
Powell has stressed repeatedly in recent months that he believes the Fed must be transparent and accountable to the public in all its actions. In a speech Thursday, he also emphasized that the Fed is making loans that it expects will be repaid, not outright financial grants.
“I would stress that these are lending powers, not spending powers,” Powell said. The Fed’s expectation is “the loans will be fully repaid."
But the Fed only has to provide updates on the spending every 30 days, meaning the public might not know about a new loan for a month.
More significantly, the Fed chair has the discretion to keep the company name and amount borrowed confidential, sharing it only with certain congressional leaders who oversee Fed activities.
During the global financial crisis, the Federal Reserve refused to turn over to reporters the records of some of its emergency bank lending. Bloomberg, the media company, sued for their release and, in a case that went to the Supreme Court, won three years later.
Sarah Bloom Raskin, a lawyer and former Fed official, said the oversight appears “weak” at a time when the Fed has been given substantial new powers to lend money.
Critics also noted that while the central bank has to share some basic information about the loans, other details, such as how many employees the company has retained or the compensation for its chief executive, might never be shared publicly.
“We should ask for the actual deal documents. Why wouldn’t you make those public?” said Marcus Stanley, policy director at Americans for Financial Reform.
Finally, other significant portions of the Cares Act specify no disclosure requirements at all regarding the recipients of the aid.
There are no such requirements, for example, for the $100 billion destined for health care providers, or the $3.5 billion for companies developing diagnostics, medications and vaccines, or the $10 billion supposed to go to airports.
Those agencies could still release the information, however, and some are planning to do so.
The Federal Aviation Administration, which is doling out $10 billion in coronavirus aid to airports, said that the agency would provide a list of the recipients once the deals are arranged, said spokeswoman Marcia Alexander-Adams.
The Department of Health and Human Services, which is supposed to roll out the money to health care providers and companies providing medications, did not respond to a request for comment about whether it would release information on recipients of $100 billion the agency is doling out to healthcare providers.
The identities of the recipients of the money in the Cares Act might also become public if the information is requested under the Freedom of Information Act, and already, some newspapers and watchdog groups have indicated that will file requests. The names of borrowers who apply to the small business loan program could be released under the Freedom of Information Act, “subject to certain exceptions,” according to the fine print on the application form. But large requests under the Freedom of Information Act often can be hampered by months or years of bureaucratic delays and litigation.
One of the most divisive of the disclosure debates could arise over the $349 billion promised to small businesses, a figure that could rise to almost $600 billion if a follow up relief bill is approved. The Small Business Administration hasn’t yet said how much has been disbursed.
Advocates for small businesses said they believe that disclosing the identities of the recipients and the amount they received could raise privacy concerns, especially from small businesses. The size of the loan, they say, could give the public clues about how much a small business makes.
“There are inferences that can be made. … It’s similar to saying, ‘Hey, how much do you make every year?’” said Molly Day, a vice president of National Small Business Association, which counts 65,000 members. “It’s private information that you wouldn’t want to share.”
Moreover, she said, “Advertising to the world that you’re having a hard time — even if everyone else in the whole world is — is something a small business might not want to do.”
But Libowitz and others advocates of government transparency point out that ignorance of the identities of the recipients might make it hard to ask key questions.
“Did they have connections? Did they lobby? Knowing who’s getting the money allows outside parties to do their oversight — and that’s something you can’t do without this information,” Libowitz said.
Staff Writers Aaron Gregg and Renae Merle contributed to this report.