Congresswoman Ayanna Pressley (MA-07) and Congressional Oversight Commissioner Bharat Ramamurti last week wrote to Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin urging the agencies to take immediate action to address the disproportionate impact of the COVID-19 pandemic on our most vulnerable communities.
The letter offers several suggestions for improving the Municipal Lending Facility (MLF) and Main Street Lending Program (MSLP) to better serve people of color and women.
“You have both acknowledged that the COVID-19 pandemic has had an outsized impact on Black and Brown communities and women, and the Federal Reserve recently proclaimed that its full employment mandate—which applies to the CARES Act programs—is a ‘broad-based and inclusive goal,’” Pressley and Ramamurti wrote in their letter. “And yet, your design of these programs appears to be widening racial and gender gaps rather than closing them.”
State and local governments have been hit hard by the economic downturn resulting from the COVID-19 pandemic, with governments laying off more than one million workers due to severe budget shortfalls. These targeted layoffs disproportionately affect Black and female workers, with workers laid off in the public sector 20 percent more likely to be Blackand 32 percent more likely to be a woman than those laid off in the private sector. The solvency of our nation’s states and cities is therefore a matter of racial justice.
Despite the many tools given to the Fed and Treasury by Congress to address this crisis, the agencies have designed a narrow, punitive lending program that has delivered aid to almost none of the state and local governments struggling during the pandemic. In contrast, the agencies’ corporate credit facilities and other interventions have boosted the stock market—prosperity, which has not been felt equally.
In their letter, Congresswoman Pressley and Commissioner Ramamurti recommended several changes to the MLF’s terms and conditions to make it a more generous and viable option for state and local governments—all of which were endorsed by nearly every witness at a recent hearing of the Oversight Commission, as well as a broad, bipartisan grouprepresenting tens of thousands of state and local officials. The changes include: (1) extending the MLF’s duration into 2021; (2) lowering the MLF’s interest rate; (3) lengthening the repayment term; (4) expanding the permitted uses for loan proceeds; (5) expanding eligibility to more municipalities, territories and tribes; and (6) the creation of a secondary-market facility.
Congresswoman Pressley and Commissioner Ramamurti also expressed concern about the disparate racial and gender impact of the MSLP, and urged the Fed and Treasury to heed the lessons learned from the administration of the Paycheck Protection Program (PPP), which saw rampant disparities in access, little transparency about which businesses were receiving funds, and a notable absence of explicit fair lending protections. To address these concerns and increase access to the MSLP, Pressley and Ramamurti recommended (1) reducing the minimum loan amount; (2) establishing and enforcing strict anti-discrimination rules; (3) allowing Community Development Financial Institutions and Minority Depository Institutions to issue loans; and (4) collecting demographic data and conduct other analyses of program impact.
“[T]here are monetary policy tools at your immediate disposal to quickly and directly address the outsized impact of the pandemic on communities of color and women, as well as the large gap between White and Black and Brown unemployment,” Pressley and Ramamurti continued. “We hope you will take these steps with the speed and urgency this moment demands.”
In April, Congresswoman Pressley, along with Congressman Gregory Meeks (NY-05) and Sens. Kamala D. Harris (D-CA) and Sherrod Brown (D-OH), led more than 80 of their Congressional colleagues in calling for the Small Business Administration and Treasury Department to ensure that minority-owned businesses are not shut out of the PPP.
In May, Congresswoman Pressley, along with Sen. Harris introduced the Saving our Street (SOS) Act, legislation that provides federal support to small minority-owned microbusinesses—largely left out of federal relief efforts– during the ongoing COVID-19 crisis.