Rep. Zeldin Urges Treasury & Federal Reserve to Allow Suffolk County to Qualify for Financing Assistance Through Municipal Liquidity Facility
PATCHOGUE, NY - On Monday, April 20, 2020, Congressman Lee Zeldin (R, NY-1), member of the House Financial Services Committee, bipartisan White House Opening Up America Again Congressional Group and bipartisan Congressional Coronavirus Task Force, urged the Department of Treasury and Federal Reserve to allow more local governments, such as Suffolk County, to qualify to utilize the Municipal Liquidity Facility.
The Municipal Liquidity Facility helps states and localities deal with budgetary stresses caused by the ongoing outbreak of coronavirus, by allowing the federal government to purchase up to $500 billion in short-term notes for these localities. This injection of $500 billion allows states and localities to continue to finance the delivery of essential services for their residents despite current budgetary shortfalls.
Currently, a county must have over two million residents to qualify for the Municipal Liquidity Facility. Suffolk County’s population is currently an estimated 1.5 million. Congressman Zeldin is urging the Department of Treasury and Federal Reserve to lower this requirement to over one million residents so additional governments, like Suffolk County, can utilize this support.
A signed PDF of the letter is available here.
Full text of the letter is as follows:
Dear Secretary Mnuchin and Chairman Powell,
I write to express my appreciation for the work the Department of Treasury and Federal Reserve are doing to stabilize the economy, and underscore the need to provide additional assistance to more local governments to ensure they have the ability to finance the delivery of essential services for their residents.
On April 8, 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF) to help state and local governments better manage cash flow pressures in order to continue to serve households and businesses in their communities. The MLF will purchase up to $500 billion of short-term notes directly from U.S. states, including the District of Columbia, U.S. counties with a population of at least two million residents, and U.S. cities with a population of at least one million residents.
I greatly appreciate the creation of the MLF, but an eligibility threshold of two million residents for U.S. counties is too restrictive and will box-out many large counties that are facing liquidity issues in new issuances of debt. As you know, local governments issue short-term notes to help smooth uneven cash flows so that they can finance the delivery of essential services.
The Federal Reserve has stated that it will continue to closely monitor conditions in the primary and secondary markets for municipal securities and will evaluate whether additional measures are needed to support the flow of credit and liquidity to state and local governments.
As the Federal Reserve evaluates whether additional measures are needed, I ask that the Federal Reserve lower the county population threshold to one million residents to capture more counties that are in desperate need of help.
Counties play a vital role in providing essential services, maintaining local infrastructure, and investing in Americans’ health. All levels of government have an important role to play in responding to this pandemic, and it is paramount that large counties under the two million population threshold are not left out of the equation.