On January 14, President-elect Joseph Biden released a $1.9 trillion rescue plan that would provide significant assistance to individuals and families, states and localities, schools and universities, and small businesses. The proposal specifically calls for additional direct payments to households, a permanent increase of the federal minimum wage to $15 an hour, extended unemployment insurance benefits, tax relief for households, $350 billion in state and local government aid, $170 billion to schools and universities, $70 billion for COVID testing and vaccine program, and $50 billion for small businesses.
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When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, it allocated $500 billion to the Exchange Stabilization Fund (ESF), $454 billion of which was for the Treasury Secretary to support Federal Reserve lending facilities. The Secretary committed $195 billion of these funds to provide credit support to some of the programs the Fed set up under its Section 13(3) emergency lending authority. The Consolidated Appropriations Act, 2021 signed into law on December 27 definitively closed these facilities and rescinded funds “not needed to meet the commitments, as of January 9, 2021, of the programs and facilities established.”
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Financial regulators restricted short selling in March 2020 after global stock markets declined in response to the COVID-19 pandemic (Otani 2020). As market participants grappled with uncertainty about quarantine measures, travel restrictions, and other impediments to commercial activity, authorities identified short-selling as a potential threat to market stability. By limiting the trading strategy, authorities attempted to keep financial markets fair, orderly, and efficient. Though scholars argue that short-selling restrictions can exacerbate market turbulence, policymakers banned short-selling for several months in a row.
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