Update (1510ET): With talks having broken down, Senate Majority Mitch McConnell (R-KY) has delayed an initial Senate vote on the stimulus package from 3 p.m. until 6 p.m. Sunday.
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Update (1254ET): Lawmakers failed to hammer out an agreement after having deadlocked on several key provisions, according to The Hill.
“We continue to talk,” said Senate Minority Leader Chuck Schumer.
House Speaker Nancy Pelosi (D-Calif.) said after the meeting that House Democrats would offer their own stimulus package that she hoped would be “compatible” with the Senate’s package.
“I don’t know about Monday but we’re still talking,” Pelosi told reporters, referring to the preferred GOP timeline for passing a bill.
The impasse comes as the Senate will hold a first procedural vote at 3 p.m., where bipartisan support will be needed to move forward.
Democrats will meet at 1 p.m. to discuss their strategy. McConnell has given no indication that he will delay the vote, potentially forcing Democrats to either move forward with the GOP leader’s plan or block the bill from advancing. Schumer did not say as he left the meeting if Democrats would allow the bill to move forward. –The Hill
McConnell says he still want to pass a stimulus package on Monday – describing talks as “very close,” but acknowledging that people are still “elbowing and maneuvering for room.”
“Now we’re at a point in the discussion where people will shortly have to say yes or no,” he added.
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With unemployment surging and GDP crashing, negotiations over a massive coronavirus stimulus package are coming down to the wire, as a 3 p.m. vote looms in the Senate over what is expected to cost between $1.5 – $2 trillion.
After blowing past two deadlines that Senate Majority Leader Mitch McConnell (R-KY) set for a deal, failure to come to an agreement could spell further disaster for the markets come Monday.
Republicans have drafted a bill which reflects agreements they’ve reached with Democratic lawmakers, and what they believe will be acceptable compromise on areas of disagreement. However, on Saturday night a spokesman for Senate Minority Leader Chuck Schumer said that there was no agreement yet, and that Democrats would not sign on to McConnell’s proposal without negotiation.
“We look forward to reviewing their first draft and negotiating a bipartisan compromise,” said the spokesman, according to The Hill.
Congress’s top leaders – the so-called ‘four corners’ met at 11 a.m. today to continue negotiations; the first time House Speaker Nancy Pelosi will have sat down with McConnell to discuss the massive deal.
After just one hour, Pelosi said that negotiations are ongoing, but that Democrats would be ‘introducing our own bill‘ and that a bipartisan agreement hasn’t yet been reached.
Limits on firms getting loans
A key sticking point for Democrats are enhanced worker protections using the loans as leverage, according to Schumer and Pelosi.
One GOP draft of the bill says companies receiving loans must keep employees on staff “to the extent possible,” but Democrats want to change this provision to offer loan forgiveness only if at least 90% of the workforce is retained, according to a person familiar with the negotiations.
Democrats took issue with the discretion that the Treasury secretary has for the money going to corporations, including which companies receive funds, the person said. Mnuchin would also have the option to waive restrictions on stock buybacks under the Republican proposal, the person said.
Democrats also want a more than two year restriction on increasing executive pay for companies that receive federal loans, the person said. –Bloomberg
On Sunday, Treasury Secretary Steven Mnuchin appeared on Fox News, where he outlined key provisions of the impending deal which he expects to pass on Monday – including up to $3,000 for a family of four, and a massive lending facility of up to $4 trillion to maintain liquidity.
“Working with the Federal Reserve — we’ll have up to $4 trillion of liquidity that we can use to support the economy,” he said, adding “Those are broad-based lending programs. … We can leverage our equity working with the Federal Reserve.”
Secretary Mnuchin joined FOX News Sunday to discuss the latest economic relief package being discussed on Capitol Hill amid the coronavirus pandemic. Some highlights include small business loans, direct deposits, and enhanced unemployment insurance. #FNS #FoxNews pic.twitter.com/1eZKI15ONC
— FoxNewsSunday (@FoxNewsSunday) March 22, 2020
For an overview of what could happen if this deal isn’t passed, Guggenheim Investments’ CIO Scott Minerd offered some thoughts last week (in case you missed it).
Needless to say, failure would sap much-needed confidence from markets which have already lost around 35% since the coronavirus spread globally last month.
What does this mean for markets and futures? While we wait for the regular 6pm reopening, the spread-betters at IG are indicating a Dow down some 562 points as of this moment, with the Dow set to open somewhere in the mid-18,000s.