Steven Mnuchin will not renew some Fed emergency lending

Business | 20 Nov 2020 8:41 am

Treasury Secretary Steven Mnuchin said Thursday he will not extend several emergency loan programs set up with the Federal Reserve, an action that could hamper the ability of the incoming Biden administration to gain important economic support from the central bank to deal with the ongoing pandemic.

The decision drew a terse rebuke from the Fed.

The central bank said it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

But in a letter to Fed Chairman Jerome Powell, Mnuchin said that the Fed’s corporate credit, municipal lending and Main Street Lending programs would not be renewed when they expire on December 31.

Under law, the loan facilities required the support of the Treasury Department, which serves as a backstop for the initial losses the programs might incur.

Mnuchin said that he is requesting that the Fed return to Treasury the unused funds appropriated by Congress for operation of the programs.

He said this would allow Congress to re-appropriate $455 billion to other coronavirus programs. Republicans and Democrats have been deadlocked for months on approval of another round of coronavirus support measures.

In public remarks Tuesday, Powell made clear that he hoped that the loan programs would remain in effect for the foreseeable future.

“When the right time comes, and I don’t think that time is yet, or very soon, we’ll put those tools away,” he said in an online discussion with a San Francisco-based business group.-AP

 

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