Negotiators clear Federal Reserve hurdle, optimistic for COVID-19 relief deal

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A coronavirus relief deal is within reach, now that lawmakers have agreed to a tentative deal to settle the dispute over the Federal Reserve’s lending powers.

Top Democratic leaders and Sen. Pat Toomey, Pennsylvania Republican, stuck a deal late Saturday to break the impasse, which had been a massive thorn in the negotiation for days, according to two top Republican aides.

Republicans wanted to ensure several of the Fed’s emergency lending programs, which were established in March and cease at the end of December. Mr. Toomey’s provision would prohibit the central bank from recreating similar programs without congressional approval.

The Republicans were concerned that failing to do so could allow the programs to become a slush fund in the near future, while Democrats were concerned that the deal ultimately would tie President-elect Joseph R. Biden’s hands when he takes office.

“Senate Republicans achieved all four of our objectives regarding the CARES Act 13(3) Federal Reserve lending programs,” Toomey spokesman Steve Kelly said in a statement. “This agreement rescinds more than $429 billion in unused CARES Act funds; definitively ends the CARES Act lending facilities by December 31, 2020; stops these facilities from being restarted; and forbids them from being duplicated without congressional approval.”

“This agreement will preserve Fed independence and prevent Democrats from hijacking these programs for political and social policy purposes,” Mr. Kelly added.

The final deal — which will combine coronavirus relief with a government funding package for the next fiscal year — has not yet been finalized, but the Federal Reserve issue was one of the last major hurdles.

Doug Andres, a spokesman for Senate Majority Leader Mitch McConnell, said that with this deal in place, negotiators can “begin closing out the rest of the package to deliver much-needed relief to families, workers, and businesses.”

According to Politico, a senior Democratic aide said Mr. Toomey “agreed to drop” some of his requests in the negotiation.

Earlier in the evening, Senate Minority Leader Charles E. Schumer, New York Democrat, told reporters that he believes both chambers of Congress will be able to vote on the entire deal Sunday.

On Friday, both chambers passed a two-day funding measure to give themselves more time to negotiate and pass the final stimulus package.

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