Thread by @NickTimiraos

Both parties are near agreement on the $900 billion Covid relief bill

Republicans secured a provision to close and keep closed the Fed’s most novel emergency lending programs with language that says they can’t be duplicated after funding expires on Dec 31 wsj.com/articles/mccon…

Toomey and Schumer agreed to revise an earlier proposal Toomey backed to restrict the Fed from ever again creating programs “similar” to its Main Street lending program and two others that bought longer-dated corporate and municipal debt without congressional approval

The new language prevents the Fed from duplicating these programs after they close but doesn’t otherwise place a further constraint on their emergency-lending powers, something that had drawn objection from Democrats and raised concerns among business groups

When Mnuchin declined to extend the lending programs last month, he had said that they could always be restarted next year if needed. The compromise legislation could add an extra step—congressional approval—to this hypothetical.

This is what Toomey wanted: he said he didn’t want the Biden administration to use the Fed’s lender of last resort powers to bypass Congress and do effective fiscal policy via subsidized lending through the Municipal Liquidity Facility or the Main Street Lending Program

It doesn’t legally bar Yellen-Powell from creating a new program similar to, say, the Main Street Lending Program—but those whole proxy war on the relief bill shows there would likely be a big political fight over such a policy decision