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Fight over $500 billion corporate loan funding holds up coronavirus stimulus

Democratic leaders are objecting to an ambitious Republican proposal to spend up to $500 billion to leverage loans to a variety of industries, ranging from airlines and energy companies to car manufacturers, as part of a coronavirus stimulus package.

As a result of this and other disagreements, Democratic leaders say they don’t have a deal ahead of a key procedural vote at 3 p.m. Sunday to proceed to consideration of the package.

“From my standpoint, we’re apart,” Speaker Nancy PelosiNancy PelosiDefense lawyers for alleged Capitol rioters to get tours of U.S. Capitol Gaetz, Greene tout push to oust Cheney: 'Maybe we're the leaders' Free Speech Inc.: The Democratic Party finds a new but shaky faith in corporate free speech MORE (D-Calif.) said Sunday morning before walking into a meeting with Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellAssaults on Roe v Wade increasing Trump spokesman says defeating Cheney a top priority Biden to meet with GOP senators amid infrastructure push MORE (R-Ky.), Senate Democratic Leader Charles SchumerChuck SchumerBiden to meet with GOP senators amid infrastructure push The Hill's Morning Report - Presented by Emergent BioSolutions - Upbeat jobs data, relaxed COVID-19 restrictions offer rosier US picture How to fast-track climate action? EPA cutting super pollutant HFCs MORE (N.Y.) and House Minority Leader Kevin McCarthyKevin McCarthySunday shows preview: Coronavirus dominates as White House continues to push vaccination effort Trump spokesman says defeating Cheney a top priority Gaetz, Greene tout push to oust Cheney: 'Maybe we're the leaders' MORE (R-Calif.).

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Treasury Secretary Steven MnuchinSteven MnuchinDemocrats justified in filibustering GOP, says Schumer Yellen provides signature for paper currency Biden's name will not appear on stimulus checks, White House says MORE, who is pushing the massive infusion of cash to the Federal Reserve loan program, also attended the meeting in McConnell’s office.

Democrats say the corporate bailout fund falls short on several counts.

They argue that it doesn’t do enough to require companies to keep workers on payroll, urging them only to keep employees “to the extent possible,” which could result in mass layoffs after companies accept billions of dollars in taxpayer-guaranteed loans.

Democrats have countered with a proposal that corporate loans could be forgiven if major companies such as United Airlines, which has seen its market share plunge in recent weeks, retain more than 90 percent of their workers through the crisis.

They also are balking at the proposal’s weak restrictions on restricting corporate buybacks, which Mnuchin can waive.

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U.S. airlines, for example, spent tens of billions of dollars in recent years on stock buybacks to boost their share prices. American Airlines alone spent $12.4 billion on stock buybacks since 2014.

The proposed loan program would give Treasury Secretary Steven Mnuchin and the Federal Reserve broad discretion to hand out loans to industries that have been hit hard by the precipitous drop in economic activity.

The rescue fund, which the Senate Republican bill initially pegged at $208 billion, would extend beyond the airline industry, which has seen its stocks plummet in recent weeks, to other industries facing a credit crunch because of the health crisis.

Mnuchin on Sunday argued the proposed $500 billion appropriation to the Treasury Department to set up a capital buffer fund for the Fed would maximize the amount of liquidity Fed chair Jerome Powell can pump into the capital markets.

“We’ll have up to $4 trillion of liquidity that we can use to support the economy. And that’s —those are broad-based lending programs under Section 133. We can leverage our equity working with the Federal Reserve,” Mnuchin said on "Fox News Sunday," referring to a section of the Federal Reserve Act that gives the agency broad power to issue loans to borrowers who cannot secure loans.

But Democrats argue the fund has few restrictions, giving the Treasury Department and Federal Reserve broad discretion to hand out loans, perhaps even to President TrumpDonald TrumpThe Memo: The Obamas unbound, on race Iran says onus is on US to rejoin nuclear deal on third anniversary of withdrawal Assaults on Roe v Wade increasing MORE’s own hotel and real estate empire.

Democrats also want to extend a proposed cap on executive compensation for companies that receive bailout loans beyond the two-year timeframe suggested by Republicans.