The Covid relief talks drag on in Congress, with the parties more or less agreeing to spend $900 billion more over a mere three months.
They're still fighting over the details, and a major obstacle is the Democratic desire to use the Federal Reserve next year to channel tens of billions of dollars or more to state and local governments.
Senate Republicans, led by Pennsylvania's Pat Toomey, want to repurpose some $429 billion in Cares Act money to finance roughly half of the new spending.
The Fed made only $25 billion in loans and other commitments because most businesses and municipalities could borrow more cheaply in the private market.
Fed Chairman Jerome Powell has agreed to return the unused funds to Treasury at Secretary Steven Mnuchin's request.
Even if the $429 billion that was turned over to Treasury is earmarked for other Covid relief, the Fed still retains some $35 billion to $40 billion as a backstop for its special pandemic facilities.
That could be leveraged as much as 10 times to lend to states and cities at terms the Biden Treasury and Fed would set.
https://www.wsj.com/articles/hijacking-the-fed-to-bail-out-states-11608248395?mod=hp_opin_pos_1
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