Reps. Tlaib, Pressley and Ocasio-Cortez Urge House Leadership to Mandate Fed Reserve Save State and Local Governments From Financial Collapse
DETROIT – Yesterday, Congressmembers Rashida Tlaib (MI-13), Ayanna Pressley (MA-07), and Alexandria Ocasio-Cortez (NY-14) wrote a letter urging House Speaker Nancy Pelosi (CA-12) and House Minority Leader Kevin McCarthy (CA-22) to ensure any coronavirus relief belief bill the House approves include a mandate requiring the Federal Reserve Bank to provide relief for the secondary market and purchase new state and municipal debt issuances as local governments respond to the emergency ahead. The coronavirus relief bill the Senate recently passed includes no such mandate.
“With the unprecedented uncertainty of how long and severe this crisis’s effect will be on the $3.9 trillion municipal-bond market and our local governments, states must be equipped with the resources necessary to fight this health crisis. State governments should not have to simultaneously worry about financial market collateral damage depleting increasingly scarce fiscal resources and tackling this pandemic,” the lawmakers wrote. “The Fed must use their authority to purchase and municipal and state debt to ensure that state governments can meet their funding needs throughout the COVID-19 crisis, which would also relieve some of the stresses weighing on the secondary muni market.”
Without a mandate, the decision to support states and municipalities would simply be left to the Federal Reserve Bank’s discretion—discretion which the lawmakers say it failed to exercise in the best interest of states and municipalities during the 2008 recession.
“Given how resistant the Fed has been towards offering assistance to state and local municipalities in the past, we believe that the Fed should be mandated to do so,” the lawmakers also wrote.
The full letter can be read here.