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Fed pandemic lending programs a sticking point in COVID relief talks

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Federal Reserve Chairman Jerome Powell looks on during a House Financial Services Committee oversight hearing to discuss the Treasury Department's and Federal Reserve's responses to the coronavirus pandemic on December 2, 2020 in Washington.

The Fed programs include Main Street business loans and purchases of corporate and municipal bonds. Pictured: Fed Chair Jerome Powell at a House committee hearing on Dec. 2, 2020. Pool/Getty Images

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Republicans and Democrats are set for more bargaining Friday to see if new COVID relief in the $900 billion range is still possible before year’s end. How long might extra federal money for unemployment go on into the spring?

And something else that’s contentious involves the future role of America’s central bank, the Federal Reserve. A group of Senate Republicans wants the COVID relief bill to specifically prohibit the Fed from restarting its pandemic lending programs or creating anything like them in the future.

The Fed programs include Main Street business loans and purchases of corporate and municipal bonds. Republicans say Democrats could pressure the Fed to revive the programs and use them to bail out mismanaged cities and corporations. Democrats say a ban on pandemic lending now could make it impossible for the Fed to start emergency lending programs in the future to backstop the economy without congressional approval.

In spite of protests from the Fed, the Treasury Department cut off money for most of the COVID lending programs, insisting they stop at the end of this year as scheduled.

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