A compromise preserves the Fed and the Treasury’s existing authority to start crisis-lending programs but prevents them from creating a copycat or “clone,” says Toomey, of two business loan programs or a muni market backstop wsj.com
The exact wording of the statute will be important, of course, in determining what this means going forward.
But a potentially bigger issue is that Republicans have signaled there will be a political fight for any active use of this new dimension of Fed credit policy
But a potentially bigger issue is that Republicans have signaled there will be a political fight for any active use of this new dimension of Fed credit policy
Consider: if there’s broad political support for a lending program, there’s less risk of second-guessing when loans default, especially for something with more credit risk
Political risk to the Fed grows as it entertains riskier lending w/out broad political support
Political risk to the Fed grows as it entertains riskier lending w/out broad political support
Toomey's position has been consistent for months, but Republicans embraced it relatively recently.
The top banking committee Republicans in the Senate and House urged Powell and Mnuchin in August, for example, to put more money to work, esp on Main Street republicans-financialservices.house.gov
The top banking committee Republicans in the Senate and House urged Powell and Mnuchin in August, for example, to put more money to work, esp on Main Street republicans-financialservices.house.gov
And over several days of hearings in late September, Powell was repeatedly pressed by members of both parties on why there wasn't more take up for the Main Street program and whether there wasn't more the Fed and Treasury could do to provide access to credit through that program.
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