Toomey praises end of Federal Reserve lending programs, will support relief deal

Sen. Pat Toomey (R-Pa.), who will be the next chairman of the Senate Banking Committee if Republicans keep their majority in 2021, on Sunday praised the outcome of negotiations with Democrats to wind down the Federal Reserve’s expanded lending powers.

Toomey, who negotiated the deal late Saturday night with Senate Minority Leader Charles Schumer (D-N.Y.), said the agreement will close four Fed credit lending facilities funded by the CARES Act: the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Main Street Lending Program and the Municipal Credit Facility.

Toomey said the deal achieved his four goals: to sweep out $429 billion in unused CARES Act funds allocated for Fed lending and repurpose the money, to shut down the four lending facilities, to forbid the reopening of those facilities, and to ban future clones of the program.

“I’m very, very pleased with that,” he told reporters on a conference call Sunday. “Those were the four goals. Those were the only goals, and we achieved every one of those goals.”

He also dismissed Democratic accusations that he was trying to hamstring the Federal Reserve’s capabilities in general or tie the hands of President-elect Joe Biden administration as “wild mischaracterizations of the Republican position.”

He said he was motivated to act by what he called “the very aggressive effort” by some Democrats to “make the case that these programs don’t end on Dec. 31,” the end date that Republican negotiators thought they had established in the CARES Act, the $2.2 trillion coronavirus relief package passed by Congress in March.

Toomey said one of the concessions he made was to narrow the language on prohibiting clone programs.

“We did narrow it relative to the language of ‘similar to’ because Democrats made a fair point. That was too broad, and that might have captured facilities that we didn’t intend to capture. Yes, it was narrowed,” he said.

Schumer on Sunday touted the narrowing of language on so-called copycat facilities as a big victory for Democrats.

“He dropped his dangerous language tying the Fed’s hands to respond to crises. Resolving this issue successfully now allows us to move into passing aid for Americans, extend unemployment insurance, deliver survival checks and more,” he tweeted.

Toomey, however, said Sunday that the changes he agreed to only clarified that the Fed’s lending powers would be restored to what they were before the CARES Act passed. He asserted it was never his intention to roll back Fed authority any further.

“These programs were never intended to hang around indefinitely,” he said of the lending facilities allowed by the CARES Act, adding that he wanted to make clear that the Fed’s new programs were always supposed to end this year.

“This was never intended to constrain the Fed’s 13(3) lending programs as a general matter,” he said of the language he insisted on last week, referring to a section of the Federal Reserve Act.

“These facilities were put in place for a specific purpose. The purpose was to restore the normal functioning of the private lending and capital markets, not as a general all-purpose salve, fix-all for the economy,” he said.

Toomey on Sunday acknowledged that “it’s hard to like this process” of Congress racing to wrap up work on a coronavirus relief bill and omnibus spending package over the weekend when many rank-and-file lawmakers don’t yet know what exactly is in the massive legislation.

But Toomey said he would support it after scoring a victory on the Fed’s lending powers, which he said was his top priority last Thursday.

The entire coronavirus relief bill is expected to cost nearly $1 trillion.

Asked if he would vote for it, Toomey, a fiscal conservative, said, “That’s a fair question, given my history. The answer is yes.”

“Despite the significant reservations I have about some particular features, I think the good outweighs the bad, and it is my intention at this point to vote for it,” he said.