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Lawmakers reach compromise over GOP proposal to rein in Fed’s powers, clearing path for a stimulus package deal (nationthailand.com)

Lawmakers reach compromise over GOP proposal to rein in Fed’s powers, clearing path for a stimulus package deal

EconDec 20. 2020

By The Washington Post · Mike DeBonis, Jeff Stein, Rachel Siegel · NATIONAL, POLITICS, CONGRESS 

Senior lawmakers resolved a major standoff late Saturday night, clearing the way for Congress to pass a nearly $1 trillion economic relief package, after Democratic leaders and Sen. Patrick Toomey, R-Pa., struck a compromise over his proposal to rein in the lending powers of the Federal Reserve.

Toomey had created a major impasse last week by demanding new limits on the central bank’s emergency lending authority. His proposal, supported by Republican leadership, threatened the delicate negotiations over the relief package. But after hours of frenzied negotiations and meetings in the Capitol, a compromise between Toomey and Senate Minority Leader Chuck Schumer, D-N.Y., was brokered around 9:30 p.m., aides in both parties said.

The revised language bars the Federal Reserve from creating precise copies of the lending programs created through the $2 trillion Cares Act passed by Congress. It affirmatively shuts down as of Jan. 1 those programs, which were seeded with a $500 billion appropriation by Congress in March. As congressional negotiators have discussed for weeks, the $429 billion in unspent funds will be redirected to other programs in the new $900 billion bill.

Toomey made his original proposal to make sure that the emergency Federal Reserve facilities created by Congress would shut down at the end of the year. Democrats worried that Toomey’s initial proposal went too far in restricting the central bank’s ability to use its long-standing emergency lending authority to respond to future economic calamities.

Republicans believe the new language will still prevent the Fed from pursuing vast new lending programs on its own without permission – and new appropriations – from Congress. At the same time, it gives the incoming administration of President-elect Joe Biden the clear authority to pursue new tools in conjunction with the central bank to confront threats to the economic recovery from the pandemic. 

The compromise language was described by three congressional aides familiar with its drafting who were not authorized to comment publicly.

Leaving his office just before midnight Saturday, Schumer declared a deal “very close” and predicted a resolution on Sunday.

“If things continue on this path and nothing gets in the way, we’ll be able to vote tomorrow,” he said.

However, at 12:18 a.m. on Sunday, President Donald Trump tweeted that Congress needs to give “more money in direct payments.” The Washington Post reported last week that White House aides talked Trump out of issuing a public statement demanding stimulus checks as big as $2,000, telling the president such a move could derail negotiations on the broader relief package. His tweet early Sunday signals that the president may not have given up on his demand.

The breakthrough with Toomey came after two days of scrambling that sent tremors across Capitol Hill, as lawmakers realized that a deal badly desired by both sides could fall through at the last minute.

The intensifying dispute had threatened to stymie talks over the relief package that would provide hundreds of billions in emergency aid to the unemployed and small businesses; funding for vaccine distribution and health-care facilities; and another round of stimulus checks to millions of Americans.

The need for such a package has only grown as the virus rampages across the nation and several emergency programs protecting tens of millions of Americans are set to expire in days.

The holidays, looming Senate runoff elections in Georgia and the prospect of a partial government shutdown on Monday are adding to the pressure for negotiators to complete a deal this weekend.

House Speaker Nancy Pelosi, D-Calif., earlier on Saturday called the dispute over Toomey’s proposal “the big thing” holding up an agreement.

Congressional leaders had given themselves until midnight Sunday to close out talks. Trump on Friday night signed a two-day spending bill to keep the government open until midnight Sunday. If no deal is reach on the stimulus package, lawmakers would have to pass another temporary measure before Monday. Otherwise, parts of the federal government would shut down.

The compromise between Toomey and Democratic leaders came together over the course of six frantic hours Saturday afternoon. As senators headed to the floor for a nomination vote shortly before 3 p.m., the dispute was threatening to turn into a partisan inferno. 

Toomey had been arguing that the Fed’s programs, initially funded with a $500 billion congressional appropriation under the March relief bill, were of marginal utility earlier in the pandemic and no longer necessary.

Democrats had countered that the Toomey proposal represented an unusual political intervention into the independence of the Fed, limiting emergency lending powers it has possessed since 1932.

“It’s no surprise that Republicans are drawing a line in the sand over their ability to sabotage the economy, and tie the Biden administration’s hands,” Sen. Ron Wyden of Oregon, the ranking Democrat on the finance committee, said in a statement.

As debate intensified on Capitol HIll, former Federal Reserve chair Ben Bernanke weighed in on the dispute in an unusual public statement on Saturday, saying that the central bank’s emergency lending authorities should be at minimum as robust as they were before passage of the Cares Act in March. Bernanke said it was “vital” that the central bank’s ability to “respond promptly to damaging disruptions in credit markets not be circumscribed.” The Fed did not release a public statement Saturday on the matter.

In the late afternoon on the Senate floor, lawmakers met to directly work out the dispute after days of sputtering staff-level talks. Toomey and Sen. Mark Warner, D-Va. – both senior members of the Senate Banking Committee – sat facing each other, flanked by nearly a dozen other senators. After about 10 minutes of sometimes animated discussion, Toomey and several other senators retreated to Schumer’s office.

After a half-hour meeting, Toomey emerged cautiously predicting a deal was possible. After a second meeting with Schumer later in the evening, the two senators traded draft legislation and finally agreed shortly before 9:30 pm, tentatively ending the standoff. 

Earlier in the evening Schumer had indicated in a call with Democratic senators that Toomey said he was willing to modify his proposal to reach a compromise and that talks would continue into the night, according to two people on the call spoke on the condition of anonymity. While Schumer said the Senate could vote as soon as Sunday on a final deal, others were cautious that the bill could be written and passed by Congress that quickly.

Lawmakers still have to resolve other issues. Those include eligibility for small-business relief; how to structure unemployment aid; and the criteria for sending out a $600-per-person stimulus check. Pelosi told House Democrats during a call on Saturday that lawmakers remained divided over the amount of money necessary for food assistance, according to a person who spoke on the condition of anonymity to share the speaker’s private remarks.

Many aides close to talks had expressed optimism that these issues could be addressed fairly quickly with the dispute over the Fed resolved. Sen. John Thune of South Dakota, the No. 2 ranking Republican, said earlier Saturday that the “probably more likely scenario” is that negotiations continue into Monday.

“But I think we’re in the homestretch; we’re on the glide path,” Thune said. “I think we’re going to get this done and help out the American people.”

Senate Majority Leader Mitch McConnell, R-Ky., has said lawmakers will not leave Washington for the holidays until a deal is done. 

After the compromise was reached between Toomey and Schumer, McConnell’s office released a statement. 

“Now that Democrats have agreed to a version of Sen. Toomey’s important language, we can begin closing out the rest of the package to deliver much-needed relief to families, workers, and businesses,” said Doug Andres, spokesman for McConnell.

Likely to run many hundreds of pages, the package is not only expected to carry a nearly $1 trillion virus relief deal but also $1.4 trillion in year-long appropriations for federal agencies; the extension of tens of billions of dollars in expiring tax breaks; a bipartisan energy bill; a long-delayed bipartisan solution to surprise medical billing; and dozens of other potential add-ons that lobbyists and congressional aides are hoping to include in this last legislative vehicle of the year.

Lawmakers will almost certainly be asked to vote on a broad piece of legislation with only hours to review it.

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Failure to quickly contain Covid-19 could hit economy hard, ex-dean warns (nationthailand.com)

Failure to quickly contain Covid-19 could hit economy hard, ex-dean warns 

EconDec 20. 2020Thai authorities place a razor wire fence around Mahachai Market where a largest cluster of Covid-19 infections originated in Samut Sakhon province.  

By The Nation

Many businesses and workers may go bankrupt if a new wave of virus infection cannot be contained quickly, an economist has warned.

The second wave of Covid-19 outbreak has so far been limited to some areas, but it is quickly spreading, Anusorn Tamajai, former dean at Rangsit University’s Faculty of Economics, warned. He suggested that the government compensate businesses and workers affected by lockdown restrictions put in place in Samut Sakhon province, west of Bangkok.

The new wave of infections poses challenges for both businesses and the government as they have limited financial resources to deal with it, he said.

New cases of infections in Thailand shot up to 689 on Sunday in six provinces, the highest number of cases on a single-day since the outbreak early this year.

The largest cluster originated from Samut Sakhon where nearly 700 people have tested positive for the virus over the weekend, and most of them are Myanmar nationals who work as labourers in Samut Sakhon in related fishing industries.

The provincial governor has ordered lockdown restrictions for 14 days, from December 19 to January 3. 

Anusorn said the government should undertake aggressive testing in key provinces which share a border with Myanmar, or have large numbers of foreign workers, such as Samut Sakhon, Samut Songkram, Samut Prakan, Nakhon Pathom, Ratchaburi, Ranong, Tak, Chiang Mai and Chian Rai. The government also has to ensure adequate medical supplies, he said. People have to wear masks, and public buses on risk routes have to be disinfected.

He said the government has to limit activities for New Year celebrations. He warned that if the government cannot contain the spread of the virus, it would damage the economy much more than when Thailand put the whole country in lockdown in March. Cases of infections may rise 4 to 5 times and it may take twice as long to contain the spread, he said.

He predicted that the Stock Exchange of Thailand Index would plunge sharply next week to below 1,438. The surge of virus cases will also limit the appreciation of the baht which had jumped to a seven-year high on Friday against the US dollar. The US move to place Thailand on a monitoring list of currency manipulators had strengthened the baht.

Gold and commodity prices are expected to rise.

Regarding the impact of the severe floods in the South, he said it would reduce the production of rubber sheets and palm oil by 0.8 to 1 million tonnes, accounting for 0.05 per cent of gross domestic product. 

The losses from the floods would not exceed Bt7 billion, he said.

The impact of floods is much smaller than the impact of the coronavirus outbreak, he said.

The Thai government has eased lockdown restrictions since May, allowing many businesses to reopen. However, the country is still effectively closed to foreign tourists.

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Lawmakers hit major roadblock over GOP plan to limit Federal Reserve, imperiling weekend deal for emergency relief package (nationthailand.com)

Lawmakers hit major roadblock over GOP plan to limit Federal Reserve, imperiling weekend deal for emergency relief package

EconDec 20. 2020Fed building/ file photo 

By The Washington Post · Mike DeBonis, Jeff Stein, Rachel Siegel, Seung Min Kim · NATIONAL, BUSINESS, POLITICS, CONGRESS, WHITEHOUSE 

WASHINGTON – Senior congressional lawmakers attempting to complete an emergency coronavirus relief package this weekend slammed into a major roadblock on Saturday over Republican demands to limit the authority of the Federal Reserve.

A late push from Sen. Patrick Toomey, R-Pa., to rein in the nation’s central bank had already divided lawmakers over the last several days. But the impasse appeared to grow significantly wider on Saturday, as congressional leadership and rank-and-file senators on both sides of the aisle dug in over the issue, imperiling prospects for a deal before Monday.

Toomey, a conservative lawmaker on the Senate’s banking committee, has demanded provisions be included in the covid relief package that would curb the ability of the Fed to restart emergency lending programs for localities and small businesses.

Senate Majority Leader Mitch McConnell, R-Ky., told Senate Republicans on a private call Saturday afternoon that the party should stick by Toomey’s plan, according to two people who requested anonymity to share details of the call.

But Senior Democrats have balked at agreeing to what they see as a nakedly political attempt to limit the economic tools available to the Biden administration. Throughout Friday and Saturday, a chorus of Senate Democrats emerged urging party leadership not to budge on the issue. Democrats have already agreed to drop aid to state and local governments from the relief package, and some lawmakers have hoped the central bank could serve as a backstop for assisting ailing municipalities.

The Toomey proposal would amount to one of the most significant intrusions into the central bank’s autonomy in years. Former Federal Reserve chair Ben Bernake weighed in on the dispute in an unusual public statement on Saturday, saying that the central bank’s emergency lending authorities should be at a minimum as robust as they were before passage of the Cares Act in March. Bernake said that it was “vital” that the central bank’s ability to “respond promptly to damaging disruptions in credit markets not be circumscribed.”

The intensifying dispute threatened to derail delicate negotiations for a nearly $1 trillion relief package that would provide hundreds of billions in emergency aid to the unemployed and small businesses; funding for vaccine distribution and health care facilities; and another round of stimulus checks to millions of Americans.

The need for such a package has only grown as the coronavirus rampages the nation and several emergency programs protecting tens of millions of Americans are set to expire in a matter of days.

House Speaker Nancy Pelosi, D-Calif., on Saturday called the dispute over Toomey’s proposal “the big thing” holding back an agreement.

Asked about the latest in negotiations, Sen. Richard Durbin, D-Ill., the No. 2 ranking Senate Democrat, said: “Toomey, Toomey, Toomey.”

The approaching Christmas holiday, a looming pair of Senate special elections in Georgia and the prospect of a partial government shutdown also are adding to the pressure for negotiators to finalize a deal this weekend.

Congressional leaders had given themselves until Sunday midnight to close out talks. President Donald Trump Friday night signed a two-day spending bill to keep the government open until midnight Sunday. If no deal is reach on the stimulus package, lawmakers would have to pass another temporary measure before Monday, otherwise parts of the federal government would shut down.

In an ominous sign for the relief talks, rank-and-file senators in both parties signaled they would be unwilling to move forward if they did not get their way over the Toomey proposal.

Sen. Elizabeth Warren, D-Mass., on Saturday denounced the Toomey plan and said “Democrats should stay firm” to resist the changes. Sen. Angus King, I-Me., a moderate who caucuses with the Democrats, said such an idea would “cripple the next administration’s ability to deal with a recession.”

On the Republican side, Sen. Tom Cotton, R-Ark., tweeted that Democrats were seeking a “slush fund for their political cronies.” Cotton added that Toomey’s position “is in fact the position of the Republican Senate Conference.” Sen. John Neely Kennedy, R-La., a member of the Senate Banking Committee, told reporters Democrats were trying to use the central bank’s authorities “as a backdoor to do what they couldn’t do through the front door.”

Kennedy added of Republicans approach to the issue: “I think we ought to stand firm.”

Sens. Toomey, Cotton, and Mitt Romney, R-Utah, met in Senate Minority Leader Charles Schumer’s, D-N.Y., office Saturday afternoon to resolve the dispute. Toomey expressed optimism about the possibility of a compromise following the meeting. But Romney, who has sought a compromise, sounded more downbeat, telling reporters: “I can’t predict what the result is going to be. I don’t know whether they’re going to be able to bridge the divide or not.”

McConnell, the Senate majority leader, has said lawmakers will not leave Washington for the holidays until a deal is done. And on Friday night he expressed optimism that a deal would get done. But on Saturday, multiple lawmakers and aides on Capitol Hill who were not authorized to speak about the negotiations publicly, conceded that it was hard to imagine a swift resolution to the stalemate over the Federal Reserve.

Lawmakers have also yet to resolve several other lingering issues. Those include eligibility for small business relief; how to structure unemployment aid; and the criteria for sending out a $600 per person stimulus check. Pelosi also told House Democrats on a call on Saturday that lawmakers remained divided over the amount of money necessary for food assistance, according to a person who spoke on the condition of anonymity to share her private remarks.

However, many aides close to talks expressed optimism these issues could be addressed fairly quickly if the dispute over the Fed is resolved. Sen. John Thune, R-S.D., the No. 2 ranking Republican senator, said Saturday that the “probably more likely scenario” is that negotiations stretch into Monday.

“But I think we’re in the homestretch, we’re on the glide path,” Thune said. “I think we’re going to get this done and help out the American people.”

Still, Treasury Secretary Steven Mnuchin told Senate Republicans on a 1 p.m. call on Saturday that Toomey’s demands had not been resolved, a person familiar with the internal call said. McConnell also told Senate Republicans on the call that the GOP needed to support Toomey’s efforts.

“I think we need to stick with where we are,” McConnell said, according to two people familiar with the call.

Republicans say the Fed’s programs, initially funded with a $500 billion congressional appropriation under the March relief bill, were of marginal utility earlier in the pandemic and are no longer necessary in any case. Toomey gave a floor speech Saturday afternoon aggressively defending his efforts.

Romney appears to be the only Republican to break with Toomey so far. Romney told reporters on Saturday that elements of Toomey’s proposals could be resolved after the current relief package is passed.

Democrats have argued the Toomey proposal represents an unusual political intervention into the independence of the Federal Reserve, limiting emergency lending powers it has possessed since 1932. Senate Minority Leader Charles Schumer, D-N.Y., also said that Federal Reserve Chair Jerome Powell opposes the proposed changes.

The central bank declined to give a public response to the heated debate.

“It’s no surprise that Republicans are drawing a line in the sand over their ability to sabotage the economy, and tie the Biden administration’s hands,” Sen. Ron Wyden, D-Ore., the ranking Democrat on the finance committee, said in a statement.

Democrats have signaled they might be willing to accept language that restricts use of Treasury funds appropriated under the March aid bill, but not language that would restrict the Fed from doing similar lending using its own assets.

“I think we could go with one part and not the other,” House Majority Leader Steny Hoyer, D-Md., said Friday. “And that’s the deal I think we ought to make.”

Hoyer told House members Friday not to expect votes until 1 p.m. Sunday at the earliest – just 11 hours before the next shutdown deadline. House Democratic leaders have scheduled a noon videoconference Saturday to update members on the negotiations.

Likely to run many hundreds of pages, the package is not only expected to carry the $900 billion covid relief deal but also $1.4 trillion in year-long appropriations for federal agencies; the extension of tens of billions of dollars in expiring tax breaks; a bipartisan energy bill; a long-delayed bipartisan solution to surprise medical billing; and dozens of other potential add-ons that a vast corps of lobbyists and congressional aides are hoping to include in this last legislative vehicle of 2020.

Lawmakers will almost certainly be asked to vote on a sweepingly broad piece of legislation with only hours to review it.

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Outcome of MPC meeting to influence SET, baht next week (nationthailand.com)

Outcome of MPC meeting to influence SET, baht next week

EconDec 19. 2020

By The Nation

Investors have been advised to keep an eye on the Monetary Policy Committee (MPC) meeting on December 23, as it would impact the Stock Exchange of Thailand (SET) Index and the baht next week.

The SET Index on Friday closed at 1,482.38, down 1.51 points or 0.10 per cent, with transactions amounting to Bt117.09 billion due to uncertainty over the US move to impose lockdown measures during the Christmas festival period.

Local institutions and foreign investors made net sales of Bt3.63 billion and Bt5.60 billion respectively, while proprietary trading and local individuals made net buys of Bt57.12 million and Bt9.18 billion respectively.

An analyst at Kasikorn Securities expected the SET next week to move between 1,465 and 1,500, advising investors to follow the MPC meeting, Thai exports in November, the Covid-19 situation, the US-China conflict and Brexit negotiations.

Among international factors, he advised following the US third-quarter gross domestic product (GDP), home sales, personal income and durable good orders, as well as China’s loan prime rate and Bank of Japan’s meeting.

The baht on Friday closed at 29.80 to the US dollar on Friday, strengthening from 30.03 at close on December 9, due to the US move to place Thailand on its monitoring list for currency manipulation and the Federal Reserve’s move to maintain bond purchases.

A strategist at Kasikornbank expected the baht next week to move between 29.60 and 30.00 to the dollar, advising investors to follow the MPC meeting, foreign funds flows, Thailand’s exports in November and the US economic stimulus package.

Among international factors, he advised investors to follow the US consumer confidence index, third-quarter GDP, home sales, personal income, durable good orders and inflation rate.

Gold on Friday closed at US$1,882.17 per ounce, while in Thailand it closed at Bt26,640 per baht weight amid the US-China conflict and the rollout of US economic stimulus package.

A strategist at YLG Bullion International advised investors to buy gold when its price drops and sell some of the precious metal when its price rises, with the support line between $1,853 and $1,866 per ounce.

“If the price rises over the resistance line at $1,899 per ounce, investors can wait to sell at the next resistance line,” he said.