Congress Considers Dueling COVID-19 Relief Proposals
With about 10 legislative days left before Congress adjourns for the year, House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer called for resuming stimulus negotiations and requested the Senate take up a recently introduced $900 billion bipartisan COVID-19 relief proposal. With enhanced federal unemployment benefits expiring for as many as 12 million workers at the end of this month, along with the end of the CDC eviction moratorium, Senators from both parties see the pressing need to reach a compromise before the end of the year.
The bipartisan proposal, which has not been released in draft form, would provide additional rental assistance funding and would include supplemental unemployment benefits above state unemployment insurance maximum levels. Specifically, the proposal would provide $25 billion for rental assistance over a three-month period. The plan would also provide $300 per week in addition to state unemployment benefits for four months starting December 1 under the Pandemic Unemployment Compensation (PUC) program. An extension of the Pandemic Emergency Unemployment Compensation (PEUC) for workers who have exhausted the initial 13 weeks has yet to be negotiated, but the Pandemic Unemployment Assistance (PUA) program for gig workers would be extended to April. 1.
Republican Senators who have signed on include Susan Collins, Bill Cassidy and Lisa Murkowski, along with Mitt Romney, while Roy Blunt and Shelley Moore Capito have suggested they may be open to it. The Democratic Senators who back the plan are Joe Manchin, Mark Warner, Jeanne Shaheen and Maggie Hassan as well as independent Angus King.
Alternatively, a significant number of Republican Senators support a $500 billion stimulus proposal introduced by Senate Leader Mitch McConnell, and have stated they would be hesitant to support legislation that went above that number. The McConnell proposal does not include rental assistance nor does it have a supplemental PUC benefit, but it would extend the PEUC and PUA programs for gig workers for one month to January 31. While both proposals offer extended support for small businesses and funding for coronavirus vaccine distribution, neither proposal includes additional individual stimulus payments or an extension of the eviction moratorium. Draft legislation for both the bipartisan plan and the smaller McConnel proposal is expected next week.
Treasury Secretary and FED Chairman Testify on COVID-19 Response
Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell appeared before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday, to testify on coronavirus pandemic assistance. Secretary Mnuchin urged Congress to utilize $455 billion of unused emergency relief funds for another round of targeted aid for American households and businesses, stating that a targeted fiscal package is the most appropriate federal response to the pandemic’s economic impact. Secretary Mnuchin praised what he called a rebounding economy, noting that the unemployment rate had dropped faster than expected, indicating future aid should be narrowly targeted. Senate Banking Committee Chairman Mike Crapo stated during the Senate hearing that Republicans have tried for months to get a COVID relief bill passed into law and that he supports a bipartisan agreement. Chairman Crapo also expressed the need for Congress to pass bipartisan housing reform legislation, and encouraged the Treasury Secretary (and the FHFA Director) to take steps to move the housing finance system in the right direction.
Testifying before both committees, Chairman Powell called for the continuation of several Federal Reserve lending programs established by the CARES Act that are set to expire at the end of the year. Under the law, any unused CARES Act funds must return to the Treasury on December 31. Slightly more than $100 billion has been given through these lending programs that now face a phase-out — including the Main Street lending facility, which provides financing to small- and medium-sized businesses. However, Secretary Mnuchin stated that those funds would be better spent elsewhere. Last month, Secretary Mnuchin announced that he would end several of the emergency loan programs — a move Chairman Powell opposed during testimony. House Financial Services Committee Chairwoman Maxine Waters (D-CA) noted during the House hearing that a number of Committee members stated it would be necessary to extend the lending facilities and expressed concern that Secretary Mnuchin called for winding down these facilities while money was still unspent.
To view the full Senate Banking Committee Hearing on the Quarterly CARES Act Report to Congress, click here.
To view the full House Financial Services Hearing on Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response, click here.
President-Elect Biden Nominates Janet Yellen for Treasury Secretary
On December 1, President-Elect Biden announced his nomination of former Federal Reserve Chairwoman Janet Yellen for Treasury Secretary. An economist by trade, Ms Yellen has served as a top economic adviser to former President Bill Clinton and served as the Chair of the Federal Reserve from 2014 to 2018 under former President Obama. She is widely credited with helping steer the economic recovery after the 2007 financial crisis and ensuing recession. As chair of the US Federal Reserve, Ms Yellen was known for focusing more attention on the impact of the bank’s policies on workers and the costs of America’s rising inequality. Following his 2016 presidential victory, President Trump ignored a short-lived Washington tradition when he opted not to appoint Ms Yellen to a second four-year term at the Federal Reserve. Starting with Bill Clinton, presidents kept on bank leaders appointed by their predecessors in an effort to de-politicize the position. Recently, Ms Yellen has spoken out about the need for Congress to do more to shield the US economy from the impact of the coronavirus pandemic. If confirmed by the Senate, she would be the first woman ever to hold the position of Treasury Secretary.
House Bill Introduced to Reestablish the Federal-Financing Bank and Risk Sharing Program
Congresswoman Nydia M. Velázquez (D-NY) has introduced legislation that would reestablish the Federal-Financing Bank and Risk Sharing Program, which helped with the creation and preservation of affordable rental housing in New York City and across the country. The bill, entitled H.R. 8824, or the Federal-Financing Bank Risk-Sharing Act of 2020, would re-implement the program and expand it to make community development financial institutions eligible for participation. Through a network of state and local Housing Finance Agencies, the program provided low-cost financing options for the creation and maintenance of multifamily affordable housing. The program was responsible for the creation of over 20,000 units of affordable housing nationwide. Despite its success, the Trump Administration allowed authorization of the program to expire in 2018. Along with many affordable housing groups and stakeholders, NAHMA has endorsed the Federal-Financing Bank Risk-Sharing Act of 2020.
To view the full text of H.R. 8824, the Federal Financing Bank Risk Sharing Act of 2020, click here.