Editor's Note: This story has been updated since it was originally reported.
WASHINGTON–A massive stimulus package that would offer emergency aid to broad sectors of the economy to battle the effects of the coronavirus remains in negotiations in the Senate, while Democrats in the House have now introduced their own even-larger stimulus plan that would include higher direct payments to Americans and potentially a ban on overdraft fees, among other measures.
In addition, House Democrats have also indicated a desire to use digital dollars and digital wallets to speed the disbursement of direct emergency funds to unbanked consumers as part of a Covid-19 economic stimulus plan, according to a report by Bloomberg. Bloomberg reported legislative text in H.R. 6321 released on Monday by House Financial Services Committee Chairwoman Maxine Waters (D-CA) would require large Federal Reserve banks and other financial institutions to provide digital wallets to individuals and joint tax filers eligible for direct governmental emergency payments.
That announcement comes at the same time the Internal Revenue Service has said it may not be able to move as quickly in identifying and making payments to eligible Americans as some in Congress would like.
Competing Measures
As CUToday.info has reported, the near $2-trillion spending plan in the Senate has now failed in two procedural votes in the Senate, but Republican negotiators, led by Treasury Secretary Steve Mnuchin, and Democratic negotiators, led by Senate Minority Leader Chuck Schumer (D-NY), said on Monday night “we’re right there, but we aren’t there yet,” according to reports from Capitol Hill.
In addition to other measures, Democrats have expressed opposition to the Senate proposal’s call for $500 billion in loans and loan guarantees for distressed companies, states and local governments, saying the plan lacks any guidelines on which companies would be eligible, on whether companies receiving funds would be required to maintain their workforces, on restrictions on recipient companies buying back their own stock, and a lack of a reporting requirement on which companies took loans until six months after the fact.
Democrats charged that if no controls are included in the legislation the $500 billion could become a “slush fund” for the administration, as it would have control over who received funds. When asked about that issue, President Trump said, “I’ll be the oversight.”
Democrats have also voiced concerns around the level of aid for hospitals and for unemployed workers.
Each side has accused the other of attempting to add unrelated measures to the enormous rescue bill.
As CUToday.info reported here, the credit union trade groups are closely watching the legislation to ensure CUs are included where appropriate at a level similar to banks in any provisions, and also to ensure no “unintended consequences.”
According to the Wall Street Journal’s latest analysis, the Democratic plan in the House is even larger than the Senate plan at $2.5-trillion and would require companies receiving aid to pay a $15-an-hour minimum wage.
Complicating matters in the Senate is five GOP senators are quarantined due to concerns they have been exposed to the coronavirus (or in the case of Sen. Rand Paul (R-KY) are confirmed to have the virus), plus one Democratic senator (Amy Klobuchar (D-MN), all of whom are in quarantine and unable to participate in a vote.
Issues Specific to Credit Unions
While the entirety of the rescue package will have a bearing on credit unions and their members, issues specific to credit unions include:
- Debate over the size of direct payments to Americans earning under certain income thresholds. The Senate plan calls for $1,200 per individual plus $500 per child; a Democratic plan in the house would increase that to $1,500 per person plus $500 per child. The Senate Republican plan has also called for the highest earners to repay part of any assistance received over a three-year period.
- The House plan would offer the unemployed an extra $600 per week on top of state or federal benefits in order to replace 100% of lost wages. The measure would also extend paid sick leave benefits to cover individuals, such as health care workers and first responders, who were cut out of Congress’ second coronavirus response, according to the Washington Post.
- The House is proposing taxpayers be allowed to make early withdrawals from their retirement funds without having to pay the usual 10% penalty during the coronavirus crisis, and required minimum withdrawals would be suspended for 2020.
- The House plan would give companies credits against payroll taxes for giving employees any kind of sick or family medical leave, not just for coronavirus-related reasons.
- Bloomberg also reported the House plan would force lenders to grant a temporary reprieve from mortgage and car payments and credit card bills. It would order the Federal Reserve to provide loan servicers with liquidity to allow borrowers to stop paying their mortgages for up to 360 days. Public housing residents would get a temporary reprieve from paying rent, and student loan borrowers would have $10,000 of debt forgiven. In addition, negative consumer credit reporting would be halted and foreclosures and evictions would be banned. " There are currently no plans for House members to return to Washington to vote on the bill, and the proposal appears to be a list of demands Democrats want to see included in the Senate bill," Bloomberg said in its analysis.
Ban on Bank Fees
Meanwhile, two Democratic senators have introduced a bill that would keep consumers from paying “unnecessary bank fees.” The bill from Sen. Cory Booker (D-NJ) and Sherrod Brown (D-OH) would bar banks, credit unions and other financial institutions from charging overdraft fees until the coronavirus crisis is over. According to Politico, the two lawmakers have also pushed for the measure to be included in the federal relief package before the Senate.