Biden adviser warns against ‘undermining’ Fed in relief bill

A top economic adviser to President-elect Joe Biden on Friday spoke out against a GOP effort to include language in a COVID-19 relief package that would prevent the Federal Reserve from using certain emergency measures. 

“The package should not include unnecessary provisions that would hamper the Treasury Department and the Federal Reserve’s ability to fight economic crises,” said Brian Deese, whom Biden has tapped as the next National Economic Council director.

“Undermining that authority could mean less lending to Main Street businesses, higher unemployment, and greater economic pain across the nation. Congress’s good faith effort to deliver immediate relief should not be delayed by provisions that could put our future financial stability at risk,” he added.

The language affecting the Fed is one of the main final sticking points holding up the package, as well as an omnibus spending package. The relief bill also includes extensions for expiring unemployment support programs, small business aid and a new round of stimulus checks.

Sen. Pat Toomey (R-Pa.) is spearheading the effort to include the language, saying that several of the emergency lending facilities created in March’s CARES Act were intended to be temporary.

Treasury Secretary Steven Mnuchin announced that he would shutter some of the emergency lending facilities, but Republicans worry that a Biden administration will be able to rev them up again using authority from the CARES Act.

The Federal Reserve put out a statement cautioning against closing the facilities, weighing in on policy in an unusually direct fashion.

Democrats say that the provision in question would create new limitations on the Federal Reserve that would hamper its abilities to respond to crises in the future.

“Legal experts, senior banking officials, and former Republican and Democratic regulatory officials all agree: the proposal to pull back on the Fed’s 13(3) authority would set a terrible precedent, hurt the Fed’s independence, and weaken its ability to respond quickly to future crises,” said Sen. Mark Warner (D-Va.), who sits on the Senate Banking Committee along with Toomey.

The government will also shut down at midnight unless Congress passes the funding deal, or a temporary measure to continue government funding.