Over the past week, the financial services regulatory agencies have continued to take actions to support the economy and markets in response to heightened volatility and uncertainty. Specifically:
9/10 – Congress - The Senate rejected a Republican-sponsored $300 billion crisis relief package, with Democratic leadership explaining that they are holding out for a compromise to provide additional funding, especially for areas such as unemployment and state and local governments. The Republican bill would include:
- $300 per week in unemployment benefits through December 27
- An additional round of Paycheck Protection Program (PPP) loans
- $105 billion in aid for schools
- Liability protections for businesses, schools, hospitals and churches against various crisis-related injury claims
- $47 billion for testing and vaccine development
9/10 - House Financial Services - The House Financial Services Committee held a hearing during which chair Maxine Waters (D-CA) urged Republicans to pass a series of bills that would provide various additional crisis-related funding including:
- Approximately $1 trillion to state, local, territorial and tribal governments
- $175b to support renters and homeowners
- An additional round of economic stimulus payments
- An extension of unemployment benefits to January 2021
- An extension of the maturity of bonds purchased by Municipal Liquidity Facility to ten years
- $10 billion to support credit to small businesses
9/10 – FRBNY - FRBNY Executive Vice President Daleep Singh gave a speech citing previous research regarding the disproportionate impact of the crisis on minority and lower-income individuals. He also noted that there have been some promising signs of recovery - owing in part to the Fed’s various liquidity facilities - but that a full recovery will take a long time and that continued fiscal support will play a key role.
9/9 – HUD - The Department of Housing and Urban Development announced a series of waivers and alternative requirements for the $3.96 billion provided to states and local governments for the Emergency Solutions Grants Program under the CARES Act.
9/8 - FRBNY - The FRBNY released updates to its Municipal Liquidity Facility FAQs.
9/7 – Fed - The Fed provided a periodic report on outstanding lending facilities. The report notes that it does not expect that any of the facilities will result in losses to the Fed.
9/4 – Boston Fed - The Federal Reserve Bank of Boston announced that the Main Street Lending Program is now accepting loans to nonprofit organizations. Originally launched on July 6 of this year, the program was originally limited to for-profit businesses.
9/4 – Fed - Fed Chair Jerome Powell gave an interview where he discussed his approach to monetary policy, noting that globalization has driven down inflation and that he intends to keep interest rates low in the near future. He also reiterated previous comments that the positive signs of recovery owe at least in part to the stimulus in the CARES Act passed earlier this year and that additional fiscal stimulus may “cost money now, but it will pay dividends later.”
Despite Fed Chair Powell’s repeated message that continued fiscal stimulus will be necessary to support the economy through the uncertainty around the recovery, Congress continues to be deadlocked with Republicans and Democrats offering a vastly different vision regarding the level of necessary support. Democratic leadership has called for a package that totals at least $2.2 trillion - an amount that far exceeds the $300 billion package set forth by Senate Republicans this week. House Speaker Nancy Pelosi (D-CA) has said that negotiations are not over, but Congressional Republicans have roundly rejected the more ambitious series of bills set forth by House Democrats with no compromise in sight. While the President last month issued an Executive Order and a series of memoranda to extend enhanced unemployment benefits and other relief measures, these actions are limited in scope and funding could run out as soon as next month. We could potentially see Congress act with renewed urgency when this funding runs out or if the pandemic worsens in the fall, particularly as competitive elections approach for a number of Representatives and Senators.