Sneak Preview: Treasury Urged To Prepare for Financial Disasters
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) The Department of the Treasury, in response to a recent Government Accountability Office (GAO) report recommendation, said it plans to consider steps taken by the Department of Transportation (DOT) when implementing aviation assistance programs during the COVID-19 pandemic to better prepare for future financial disasters.
The report is among the latest in a series of GAO reports on the public health effects and economic conditions since the beginning of the COVID-19pandemic. The report identified lessons learned from the pandemic that could help federal agencies better prepare for, respond to and recover from future emergencies.
GAO determined that Treasury in 2020 had to quickly design several COVID-19 financial assistance programs, including a $46 billion loan program for aviation and other eligible businesses under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136). The agency faced challenges when establishing program infrastructure, developing credit standards and drafting loan documents in a short time frame and under difficult circumstances. In December 2020, GAO reported that although Treasury’s policies and procedures for evaluating loan applications were generally consistent with internal controls, the program could have been improved.
GAO found Treasury did not clearly communicate eligibility requirements and specific time frames to applicants. As a result, businesses were unsure when Treasury would execute loans, which complicated their planning efforts while awaiting loan decisions. Treasury officials said the emergency nature of the program and the emphasis on quickly distributing funds limited the amount of time it had to conduct its outreach when implementing new programs.
Program applicants were more complementary of DOT’s communication regarding the Airport Grants Program and Aviation Manufacturing Jobs Protection Programs that were established during the COVID-19 pandemic, GAO found. For the Airport Grants Program, for example, DOT generally provided timely guidance and assistance, applicants told GAO.
Treasury officials told GAO that they have not yet attempted to create a specific plan for financial assistance programs for future crises because each scenario requiring emergency financial assistance is unique. They added that the agency does not have the resources to design plans that would respond to the varied contingencies that may apply. As such, the agency is compiling resources that could be useful across sectors and goals for future financial assistance, such as those relating to liquidity of funds and employment retention.
(The full version of this story has now been made available to all for a limited time here.)
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