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U.S. Senate Republicans are preparing to bring up legislation today to replenish a program that helps small businesses slammed by the coronavirus, as House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin discuss a larger stimulus package, Reuters reported. Pelosi and Mnuchin, who have been negotiating intermittently since August on a fresh coronavirus aid plan, plan to speak again on Tuesday after they “continued to narrow their differences” in a nearly hour-long call yesterday, Pelosi’s spokesman, Drew Hammill, wrote on Twitter. Pelosi, the top elected U.S. Democrat, has set the end of the day today as a deadline for agreement with the White House, if a comprehensive coronavirus relief bill is to get through both chambers of Congress before Election Day on Nov. 3. President Donald Trump’s administration has proposed $1.8 trillion, while Pelosi has been pushing for a $2.2 trillion aid and stimulus package. That is in addition to the $3 trillion in coronavirus relief Congress already approved in the spring. While Pelosi said on Sunday she was optimistic a deal could be reached on a fresh package, and a spokeswoman said Monday the White House was also “cautiously optimistic,” optimism was in shorter supply in the Republican-run Senate, where many Republicans oppose passing more coronavirus aid. A senior Senate Republican, John Thune, expressed doubt Monday that there would be enough Senate Republican votes to pass a comprehensive bill as large as the White House bid of $1.8 trillion. Instead, Senate Republicans will propose on Tuesday a new round of funding just for the Paycheck Protection Program, a popular program that was launched earlier in the pandemic with bipartisan support to provide loans to small businesses. The measure is not expected to advance, because Senate Democrats have already given notice they consider such targeted efforts inadequate. McConnell said that the Senate also plans a vote on Wednesday on a $500 billion-plus Republican proposal to include unemployment benefits and aid to schools. It would provide people with $300 in federal weekly unemployment benefits, while the Democrats want to return to the $600 weekly level in a measure approved earlier this year. Democrats blocked a similar Republican proposal last month and the measure on Wednesday is also expected to fail. Read more.

In related news, Congress in March allotted $454 billion to the Treasury Department to support the central bank’s emergency lending programs, including those for struggling businesses and local governments. Of that pot, only $195 billion has been specifically committed to cover any losses the Fed might take, including through loans that companies fail to repay, the Washington Post reported. Seven months into the crisis, the remaining $259 billion still has not been committed to any of the Fed’s specific programs or for any other purpose, and it is unlikely that it will be anytime soon. The fate of this money show the surprising limits of the nearly $3 trillion in emergency aid Congress approved early in the pandemic. Federal Reserve and Treasury Department officials say there are ways the money could be repurposed to more directly reach businesses and workers but say they cannot do so without congressional approval. White House officials tried redirecting the money without congressional approval but were told by administration attorneys that they could not do so legally, according to two people who spoke on the condition of anonymity to describe internal conversations. Read more.

As Congress continues to remain deadlocked over a new round of stimulus, studies show that the picture for many small businesses remains bleak, the Washington Business Journal reported. A National Federation of Independent Business survey showed 22 percent of PPP borrowers anticipate layoffs in the next six months, nearly half anticipate needing additional financial support in that time, and 44 percent of owners would apply for a PPP loan for the first or second time if Congress extended the program. New data from Yelp shows that 163,735 businesses on its platform have closed since the pandemic began, of which at least 60 percent are permanent. Bankruptcy reorganizations in September were higher than any September since 2011, according to the American Bankruptcy Institute. The already desperate situation for small businesses is magnified for owners of color, said Sarah Crozier, senior communications manager at small-business group Main Street Alliance. She said that 46 percent of Black, Latinx and Asian American business owners say they can only stay open for fewer than six months, per data from a study commissioned by the national small-business network. Overall, the study found, 75 percent of small-business respondents are finding it difficult to negotiate favorable deals with their landlords, while 70 percent say the same thing about their banks.

Senate Majority Leader Mitch McConnell (R-Ky.) yesterday rejected a coronavirus relief deal that costs more than $1.8 trillion, hours after President Trump indicated he was "absolutely" willing to raise his spending offer, FoxBusinessNews.com reported. Asked whether there can be a compromise between the White House-backed $1.8 trillion proposal and a $2.2 trillion offer put forward by House Democrats earlier this month, McConnell pushed back. “I don’t think so," he said. "That’s where the administration's willing to go. My members think what we laid out, a half a trillion dollars, highly targeted, is the best way to go." "What I’m going to put in the floor is what Senate Republicans, 52 out 53 of us, feel like it’s an appropriate response," he said. "You are correct there were discussions going on between the secretary of the Treasury and the speaker about the higher amount. That’s not what I’m gonna put on the floor.” McConnell's comments came shortly after Trump told FOX Business he was considering upping his offer for a coronavirus relief package above the White House's current $1.8 trillion proposal.

Two new studies have found that after an ambitious expansion of the safety net in the spring saved millions of people from poverty, the aid is now largely exhausted and poverty has returned to levels higher than before the coronavirus crisis, the New York Times reported. The number of poor people has grown by 8 million since May, according to researchers at Columbia University, after falling by 4 million at the pandemic’s start as a result of a $2 trillion emergency package known as the CARES Act. Using a different definition of poverty, researchers from the University of Chicago and Notre Dame found that poverty has grown by 6 million people in the past three months, with circumstances worsening most for Black people and children. The recent rise in poverty has occurred despite an improving job market since May, an indication that the economy had been rebounding too slowly to offset the lost benefits. And now, the economy is showing new signs of deceleration, amid layoffs, a surge in coronavirus cases and deadlocked talks in Washington, D.C., over new stimulus.

The chances of Congress passing a pre-election stimulus are all but gone, as Treasury Secretary Steven Mnuchin yesterday blamed politics for undermining the months-long negotiations, Bloomberg News reported. “At this point getting something done before the election and executing on that would be difficult, just given where we are in the level of details,” Mnuchin said. With a deal out of reach, the two sides in the talks faulted each other for the breakdown. The Treasury chief, who is scheduled to be in the Middle East next week, made his remarks after another in a long series of calls with Pelosi that have failed to seal a deal. While Mnuchin said he hoped for bipartisan support for Senate Majority Leader Mitch McConnell’s latest idea -- a vote on a narrow bill next week to help small businesses -- Democratic leaders have no appetite for piecemeal measures now. The inability to bring months of negotiations to conclusion has sparked increasing tensions, with each camp seeing internal strains rise as it becomes clear there won’t be a spending bill to take to the public.

Senate Majority Leader Mitch McConnell (R-Ky.) announced yesterday that the Senate will take up a narrow economic relief bill when it comes back in session next week, the Washington Post reported. President Trump immediately undermined the move, writing on Twitter: “STIMULUS! Go big or go home!!!” Senate Republicans have balked at a $1.8 trillion relief package Treasury Secretary Steven Mnuchin has offered to House Speaker Nancy Pelosi (D-Calif.). Trump, though, has suggested Republicans should agree to an even bigger deal than what Democrats have offered. Pelosi has already rejected Mnuchin’s offer as completely inadequate, criticism she repeated Tuesday in a letter to House Democrats where she wrote, “Tragically, the Trump proposal falls significantly short of what this pandemic and deep recession demand.” Meanwhile McConnell will try again to pass a much more limited proposal, something he already attempted last month. Democrats blocked it at the time and may do so again with the new bill, which seems like it will be similar to the last one. The new bill will cost roughly $500 billion and will include provisions to extend enhanced unemployment insurance and the small business Paycheck Protection Program, as well as money for hospitals and schools, among other things.

U.S. unemployment claims, which have surged during the coronavirus pandemic, are amplifying a compliance risk for financial institutions: unemployment insurance fraud, the Wall Street Journal reported. The Treasury Department’s Financial Crimes Enforcement Network issued an advisory yesterday, alerting banks to red flags that could indicate illicit activity, including emerging schemes exploiting vulnerabilities created by the pandemic. In particular, U.S. authorities and financial institutions have spotted instances of fraud related to unemployment payments, according to FinCEN. Unemployment insurance is a prime target for fraudsters, given the high volume of people who have lost their jobs due to the pandemic, according to Raymond Dookhie, a managing director at compliance advisory firm K2 Intelligence LLC. “The financial systems that are set up to monitor fraud in this current environment are being overloaded,” he said. Smaller financial institutions, which often have less sophisticated monitoring systems or fewer resources to investigate suspicious activity, are particularly vulnerable, Dookhie said. Pandemic-related unemployment fraud could include the use of fake or stolen identities, misrepresentation of income, false claims of having worked for a legitimate company or, in some cases, for a fictitious one, using falsified employee and wage records, FinCEN said.

The White House again pivoted its approach to stimulus negotiations on Sunday, with the president’s aides pushing for immediate action on a narrow measure after the administration’s $1.8 trillion proposal was rebuffed by members of both parties, the Washington Post reported. In a letter to Congress sent Sunday, White House Chief of Staff Mark Meadows and Treasury Secretary Steven Mnuchin asked lawmakers to first pass legislation allowing the Trump administration to redirect about $130 billion in unused funding from the Paycheck Protection Program intended for small businesses while negotiations continue on a broader relief effort. The administration’s latest request is unlikely to advance in the House, where Speaker Nancy Pelosi (D-Calif.) has rejected stand-alone legislation in favor of a comprehensive package to address the economic and health consequences of the coronavirus pandemic. The administration’s $1.8 trillion stimulus proposal on Friday came under heavy criticism from lawmakers in both parties over the weekend, making its chances of passing appear remote. White House officials will request that Congress approve legislation allowing firms demonstrating a decline in revenue to apply for a second round of PPP funding, which they are not allowed to do under existing law, according to one person familiar with the plans who spoke on the condition of anonymity to discuss the administration’s internal planning.