Tags: democrats | fed | buy | low | rated | muni | debt

Democrats Push for Fed to Buy Low-Rated Muni Debt to Ease Strain

Democrats Push for Fed to Buy Low-Rated Muni Debt to Ease Strain

(Dreamstime.com)

Tuesday, 07 April 2020 04:51 PM EDT

Democrats in Congress want the Federal Reserve to buy all types of municipal debt, regardless of rating, to help ease the impact of the coronavirus pandemic on state and local governments.

“I think they should take the risk,” said Representative Rashida Tlaib, a member of the House Financial Services Committee. “We did it for the big banks, they should be able to do it for the local governments. Local governments are too important to fail right now.”

The coronavirus pandemic has crushed sources of tax revenue for states and localities at a time when resources, including paramedics and hospitals, are being committed to combat the threat to public health.

Tlaib said that her view has the support of Financial Services Chairwoman Maxine Waters and House Speaker Nancy Pelosi. She’s pressing to pass legislation that would change Section 14b of the Federal Reserve Act to allow the central bank to buy municipal debt of any duration in response to crises and emergencies A bill introduced in the Senate by New Jersey Democrat Bob Menendez also backs such an amendment.

“I’ve been given the green-light to continue pursuing this issue,” Tlaib said in an interview with Bloomberg News. “We want a permanent fix to this.”

Tlaib said she expects her legislation to be part of any proposal Democrats put forward for a fourth phase of stimulus related to the government’s coronavirus response.

“We want to provide as much authority and clarity,” Tlaib said. “Chairman Powell, in the past, has pushed back on whether or not he really truly has authority. Well, we’re giving it to him. And we’re being very clear about what those guidelines are.”

Tlaib said the message to Powell would be: “This is something you will be able to do and you’re going to do.”

© Copyright 2026 Bloomberg News. All rights reserved.


StreetTalk
Democrats in Congress want the Federal Reserve to buy all types of municipal debt, regardless of rating, to help ease the impact of the coronavirus pandemic on state and local governments.
democrats, fed, buy, low, rated, muni, debt
296
2020-51-07
Tuesday, 07 April 2020 04:51 PM
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