Pauls' Revere
Member
- Joined
- Nov 15, 2007
- Messages
- 11,347
https://finance.yahoo.com/news/democrats-push-fed-sole-sway-200913549.html
(Bloomberg) -- Congressional Democrats are pushing to have the Federal Reserve take over the rescue of state and local debt markets -- cutting the Treasury Department out of the decision-making.
The central bank is expected to announce a new emergency facility to support municipal debt, part of the $2 trillion stimulus approved last week. It had the backing of progressive Democrats and conservative Republicans alike, including Senators Elizabeth Warren and Mike Crapo. They’re urging the Fed and Treasury to move quickly.
In the next round of legislation, House Speaker Nancy Pelosi and some congressional Democrats want to push further. They favor taking decisions about where to use the money out of the political realm and giving them solely to the independent Fed.
The notion has been circulating for months among progressives in Congress. If the law is changed, it would give the Fed another congressionally mandated goal -- beyond stable prices and maximum employment -- by designating the Federal Open Market Committee to be the buyer of last resort of the debt of troubled states and municipalities.
Legislation introduced by Democratic Senator Robert Menendez would create a permanent change to the Federal Reserve Act to allow the central bank to purchase municipal debt “under unusual and exigent circumstances” through direct purchases via open market operations.
Currently, the Fed and Treasury are operating under Section 13.3 of the Federal Reserve Act. It allows the Fed, with Treasury permission, to open a broad-based facility to support troubled areas of the financial markets in an emergency.
Congresswoman Rashida Tlaib, a Michigan Democrat, had a sharp exchange with Powell in February over his authority to support municipal debt.
Fed’s Job
“Do you not believe that the governments of Detroit and Puerto Rico also play a vital role that should be preserved, even if a financial crisis makes it hard for them to borrow money?” Tlaib asked Powell.
“That’s not a job for the Fed,” Powell said. “Lending to state and local governments and supporting them when they’re in bankruptcy is not -- that’s not part of our mandate.”
Tlaib finished by saying: “We are going to strongly disagree.”
Congress is useless, they simply ask for currency and let the FED decide how to allocate it.
(Bloomberg) -- Congressional Democrats are pushing to have the Federal Reserve take over the rescue of state and local debt markets -- cutting the Treasury Department out of the decision-making.
The central bank is expected to announce a new emergency facility to support municipal debt, part of the $2 trillion stimulus approved last week. It had the backing of progressive Democrats and conservative Republicans alike, including Senators Elizabeth Warren and Mike Crapo. They’re urging the Fed and Treasury to move quickly.
In the next round of legislation, House Speaker Nancy Pelosi and some congressional Democrats want to push further. They favor taking decisions about where to use the money out of the political realm and giving them solely to the independent Fed.
The notion has been circulating for months among progressives in Congress. If the law is changed, it would give the Fed another congressionally mandated goal -- beyond stable prices and maximum employment -- by designating the Federal Open Market Committee to be the buyer of last resort of the debt of troubled states and municipalities.
Legislation introduced by Democratic Senator Robert Menendez would create a permanent change to the Federal Reserve Act to allow the central bank to purchase municipal debt “under unusual and exigent circumstances” through direct purchases via open market operations.
Currently, the Fed and Treasury are operating under Section 13.3 of the Federal Reserve Act. It allows the Fed, with Treasury permission, to open a broad-based facility to support troubled areas of the financial markets in an emergency.
Congresswoman Rashida Tlaib, a Michigan Democrat, had a sharp exchange with Powell in February over his authority to support municipal debt.
Fed’s Job
“Do you not believe that the governments of Detroit and Puerto Rico also play a vital role that should be preserved, even if a financial crisis makes it hard for them to borrow money?” Tlaib asked Powell.
“That’s not a job for the Fed,” Powell said. “Lending to state and local governments and supporting them when they’re in bankruptcy is not -- that’s not part of our mandate.”
Tlaib finished by saying: “We are going to strongly disagree.”
Congress is useless, they simply ask for currency and let the FED decide how to allocate it.
