Lawmakers Resolve Fed Dispute as They Race to Close Stimulus Deal

Mr. Toomey and his Republican allies argued that his original proposal merely codified what Congress intended in March when it enacted the original $2.2 trillion pandemic stimulus law, which earmarked funding to support the Fed’s emergency lending programs. But the scope of the language proposed by Mr. Toomey went beyond that, prompting alarm from Democrats, who said they were enlisting prominent figures to weigh in against it.

Ben S. Bernanke, who led the Fed through the 2008 financial crisis, had issued a statement warning that it was “vital that the Federal Reserve’s ability to respond promptly to damaging disruptions in credit markets not be circumscribed.”

Referring to the March stimulus law, Mr. Bernanke added, “The relief act should ensure, at least, that the Federal Reserve’s emergency lending authorities, as they stood before the passage of the CARES Act, remain fully intact and available to respond to future crises.”

Mr. Schumer said that Jerome H. Powell, the current Fed chairman, whom he called “hardly a flaming liberal” was “strongly opposed” to Mr. Toomey’s proposal. The Fed declined to comment on whether Mr. Powell, a Republican who was first nominated as a central bank governor by former President Barack Obama, had discussed the issue with Mr. Schumer in recent days. Mr. Schumer’s office did not respond to a request for more details.

On a private call with House Democrats on Saturday, Speaker Nancy Pelosi of California denounced the proposal, telling lawmakers that “for them to write in there that this cannot happen ever again is just beyond the pale,” according to a person on the call, who disclosed the comments on the condition of anonymity.

“It’s a way for them to say to Joe Biden: ‘We are tying your hands. No matter what comes down the pike, you can’t do this,’” Ms. Pelosi told Democrats.

Mr. Toomey denied that he was seeking to hamstring the Biden administration, and pointed out that he had for months sought to ensure that the Fed’s pandemic programs sunset. But the language he has proposed to attach to the stimulus plan has been more expansive than that.