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By Matthew Cunningham-Cook and David Sirota
Pennsylvania Republican Senator Pat Toomey’s effort to wind down emergency low-interest lending programs for small businesses and state and local governments removes a major long-term business threat to his largest campaign contributors as he looks ahead to a career outside the U.S. Senate, according to campaign finance data reviewed by The Daily Poster.
On Thursday, Toomey threatened to blow up coronavirus stimulus legislation by demanding that the bill remove authorization for the Federal Reserve programs designed to provide low interest loans to small businesses and governments. Toomey criticized the programs for moving the central bank from a lender of “last resort” to a lender of “first resort” — and he is pushing for proposed language in the final bill that would compel the Fed to wind down programs designed to help struggling small businesses, states and municipalities.
That is a big win for Toomey’s Wall Street donors, because it curtails lending programs that could offer those small businesses and local governments lower interest rates and fees than the private financial industry currently offers. Those fees are big business: Currently, local governments pay $2.7 billion each year in such fees, according to the Internal Revenue Service.
To be sure, the Fed’s emergency lending programs have so far been underutilized, but if they were reformed — rather than eliminated, as Toomey wants — they could threaten profits for a financial industry that has bankrolled Toomey’s political career.
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