1 1 (May 26, 2020)

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               Researh Sevice





HEROES Act (H.R. 6800): Selected Federal

Reserve Provisions



May 26, 2020

On May 15, 2020, the House passed the HEROES Act (H.R. 6800), a wide-ranging Coronavirus Disease
2019 (COVID-19) relief bill. This Insight discusses selected provisions related to the Federal Reserve
(Fed).


Background

In response to COVID- 19, the Fed has taken a number of actions to promote economic and financial
stability. Traditionally, the Fed acts as lender of last resort, providing solvent banks with short-term
liquidity to manage cash flow. In response to the unprecedented economic disruptions posed by the
pandemic, the Fed extended that role to nonbank firms and markets to ensure they have continued access
to needed funding. In some cases, the Fed provided long-term assistance to borrowers who may not
remain solvent if the pandemic persists for an extended time period.
To date, the Fed has created nine emergency facilities in response to COVID- 19 under its emergency
authority found in Section 13(3) of the Federal Reserve Act. (See CRS Insight IN11327, Federal Reserve:
Emergency Lending in Response to COVID-19, by Marc Labonte.) Section 13(3) requires the Fed to
minimize the risk of losses, so riskier Fed facilities have been backstopped by funding provided to the
Fed by the CARES Act (P.L. 116-136). (See CRS Report R46329, Treasury and Federal Reserve
Financial Assistance in Title IVof the CARES Act (PL. 116-136), coordinated by Andrew P. Scott.)
The pandemic has imposed large losses on many borrowers, creditors, businesses, nonprofits, states, and
local governments, and Congress is debating whether the policy steps taken to date are sufficient. The
HEROES Act would expand the government's assistance, in part, by providing the Fed with new
authority and mandates in an effort to further expand its lender-of-last-resort role to additional entities.







                                                               Congressional Research Service
                                                               https://crsreports.congress.gov
                                                                                    IN11404

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