WASHINGTON, Dec. 17 (Reuters) – A new potential impediment to a $ 900 billion coronavirus emergency economic bill has emerged in Congress on Thursday as some Senate Republicans insisted that expiring Federal Reserve funding programs should not be revived could be.
A Democratic aide criticized the decision of Senator Pat Toomey, a Pennsylvania Republican, saying it would limit President-elect Joe Biden’s ability to respond to the severe economic toll of the pandemic, which in addition to killing more than 300,000 Americans work millions of people.
“It would bind the hands of the Biden administration to use those tools if necessary,” said a senior House Democratic assistant.
Both sides were scrambling on Thursday to negotiate a new compromise aid package. They have set aside Democratic demands for a new flow of funding for state and local governments and Republican demands that companies be protected from coronavirus-related lawsuits.
But Toomey wants to ensure that the Fed and Treasury are stripped of the power to restore pandemic credit facilities that Treasury Secretary Steven Mnuchin will expire on Dec. 31, including the Main Street program for midsize businesses and facilities for municipal bond issuers and corporate credit and asset-backed securities.
Mnuchin is pulling back about $ 455 billion from the Fed’s facilities, which would be used to help pay for the new aid package for individuals and small businesses.
But the move limits options for Biden’s Treasury Secretary, Janet Yellen, to cut financial markets in the event of more turmoil, and his transition team called it “deeply irresponsible”.
Toomey told reporters that his proposal will prevent the Treasury and Federal Reserve from making “decisive copies” of the loan programs to reconstruct them under new names.
“I think there is very broad support among Republican senators for this approach and it is very important to many of us,” Toomey said.
Senator Mike Crapo, Republican chair of the Senate Banking Committee, said he supported Toomey’s proposal because in the COVID-19 legislation passed in March, “We have made it very clear that the facility will be discontinued by the end of this year. . “
Toomey, who would chair the banking panel next year if Republicans retain Senate seats in the January 5 elections in Georgia, said the Fed would still retain its powers to provide non-pandemic emergency loans. The central bank and treasury should “come to Congress if they think there is a specific need for extraordinary programs,” he said.
Reporting by David Lawder; Editing by Scott Malone and Grant McCool