Brian Chappatta, Columnist

The Fed Has a Not-So-Secret Weapon to Fill Stimulus Void

A borrowing facility for states and cities should be extended for another year and provide more affordable financing.

October 7, 2020 at 5:50 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Give states and cities the green light.
Photographer: Drew Angerer/Bloomberg

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It’s abundantly clear that U.S. lawmakers aren’t going to agree on the amount of aid to send to state and local governments. President Donald Trump has made such support into something of an “us versus them” issue ahead of Election Day, claiming House Speaker “Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19,” in a tweet on Tuesday that called off fiscal stimulus negotiations.

In reality, the two sides weren’t even that far apart. Republicans, led by Senate Majority Leader Mitch McConnell, said they would be willing to give states and cities $250 billion in federal aid, up from an earlier $150 billion, while Democrats wanted about $436 billion, down from an initial $1 trillion. Whom to blame for the inability to bridge that gap most likely depends on your political leanings.