Dialog concerning the Fed's lending powers has stalled

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Lawmakers argued over Republicans' plans to curb the Federal Reserve's crisis lending over the weekend when talks about a $ 900 billion economic aid package kicked off before the funding deadline on Sunday evening.

The members of Congress had originally set a deadline for the end of the working week to reach an agreement to further fund the federal government and urgently needed support for a US economy affected by the Covid 19 pandemic. However, a stop-gap measure approved late Friday extended the deadline to the end of the weekend.

Earlier this week, congressional leaders insisted that a deal be struck on the second largest economic aid package in US history, falling only short of the $ 2.2 billion Cares Act, which was released in March at the start of the coronavirus Pandemic in the US was passed US.

Negotiations, however, ran into a stumbling block on Thursday when Pat Toomey, a Republican senator from Pennsylvania, attempted to include language in legislation that would prevent the Fed from reviving emergency credit facilities that are due to expire later this year.

Democrats have sharply opposed the effort, accusing Republicans of last-minute attempts to tie the hands of a Joe Biden White House.

The proposal sparked a public warning from Ben Bernanke, the former Fed chairman, on Saturday.

"I strongly support the adoption of new aid to families and businesses suffering from the effects of the pandemic," Bernanke wrote in a statement.

However, it is also important that the Federal Reserve's ability to respond promptly to harmful disruptions in the credit markets is not re-written. The relief bill should at least ensure that the Federal Reserve's emergency lending agencies, as they stood prior to the passage of the CARES bill, remain fully intact and available to respond to future crises. "

Mr Biden will be inaugurated as the 46th President of the United States on Jan. 20, and while the Democrats will control the House of Representatives, it remains unclear whether the Republicans will hold the Senate. Control of the upper chamber of Congress will be decided by two runoff elections for the Senate due to take place in Georgia on January 5th.

Chuck Schumer, the senior Senate Democrat, said Saturday that Mr. Toomey's proposal was the "main open issue" in the negotiations.

"Senator Toomey's new proposal would potentially prevent the Treasury Department and the Fed from setting up new emergency credit facilities in the future, significantly reducing their ability to respond to economic crises," Schumer said.

"Senator Toomey's proposal would do more than just prevent the next Treasury Secretary and the US Federal Reserve Chairman from taking advantage of the emergency loan programs that saved our economy and stabilized markets in March and April," he added. "It could potentially prevent them from setting up new facilities that look or even smell like these programs."

On Saturday before, Mitch McConnell, the Republican Senate majority leader, called on the Democrats to compromise.

“There is a kind of pull here in Congress where any major negotiation can easily get caught up in an endless catalog of disagreements if we're not careful. Let's protect ourselves from that, ”he said.

"We have had productive discussions over the past week," he said. "But the American people cannot feed their families or pay their bills with the bona fide discussions of Congress." You need us to act. We need to finalize our talks, draft laws, and land this plane. "