House lawmaker calls for freezing consumer and business credit payments

WASHINGTON (Reuters) – All payments on mortgages, credit cards, small-business loans and other consumer debt would be indefinitely suspended under a plan unveiled on Wednesday by a senior Democratic House lawmaker in response to the coronavirus outbreak.

The proposed plan from Representative Maxine Waters, who chairs the House of Representatives Financial Services Committee, would also direct the Federal Reserve or Treasury Department to create a credit facility to cover the cost of those stalled payments to creditors.

“The circumstances we are facing are unprecedented and will require creative approaches,” she said in a statement.

Waters’ plan is the latest in a series of proposals from members of Congress and the White House as policymakers are scrambling to contain the spread of the flu-like virus and the economic fallout accompanying widespread quarantines.

Her plan would also authorize the Fed, using money provided by Congress, to give $2,000 per month to every U.S. adult and $1,000 for every child until the pandemic eases. Her plan would also bar negative credit reporting, debt collection and repossession of goods during the pandemic. She would also institute a temporary ban on evictions and foreclosures nationwide.

Her plan would also allow for Americans to forgo up to $10,000 in student loan debt, and create a reinsurance program for future pandemics similar to one that currently exists to protect losses stemming from terrorist attacks.

As chairwoman of the banking panel, Waters has considerable sway over financial policy. But there are multiple policy plans emerging from lawmakers and the White House, making it unclear how much of her plan could gain traction.

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