In the midst of one of the fastest and deepest economic declines in U.S. history, the largest banks are expected to pay out about $14 billion in dividends in the third quarter, while remaining under a cap imposed by the Federal Reserve in response to the coronavirus pandemic.
On June 25, 2020 the Government Accountability Office (GAO) provided a comprehensive report to Congress detailing the US government’s response to the COVID pandemic, particularly the four relief laws passed prior to June 2020, and actionable steps to improve those efforts. Within these four laws, $2.6 trillion has been mobilized (breakdown below). However, the GAO does not have insight into the actual expenditures, only appropriations, as the federal agencies will begin detailing spending in their July 2020 monthly reporting. In regards to the overall federal response, the GAO notes the speed with which the programs were launched. However it faults agencies for “[making] only limited progress so far in achieving transparency and accountability goals.”
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, which passed on March 27, established the Paycheck Protection Program (PPP), the US government’s largest and most controversial program put in place to address the economic impacts of the COVID-19 virus. Since April 3,the PPP has issued nearly 4.9 million loans guaranteed by the Small Business Administration (SBA). As of June 30, banks and other private lenders have extended $521 billion in government-guaranteed, forgivable loans under the program. The government’s support measures have enjoyed popularity with taxpayers compared to those enacted during the Global Financial Crisis (GFC). However, the PPP has been under constant scrutiny from Congress and industry critics since implementation. In response to such criticism and changing economic conditions, both Congress and the SBA have repeatedly modified the program.
Below we report on operational Fed programs, based on the Fed’s weekly H.4.1 release. Since last week, the total amount outstanding across all 10 lending facilities has fallen for the first time since the beginning of the crisis. Central banks have continued to reduce their use of the swap agreements with the Federal Reserve.
On July 1, the Reserve Bank of India (RBI) announced guidelines for a $4 billion (₹300 billion) special liquidity scheme (SLS) to purchase short-term debt from eligible non-banking financial firms (NBFCs) and housing finance companies (HFCs). The RBI said its purpose is to “avoid any potential systemic risk to the financial sector.”