DM Monitoring
Washington: US Treasury Secretary Steven Mnuchin said that key pandemic lending programs at the Federal Reserve would expire on Dec. 31, putting the outgoing Trump administration at odds with the central bank and potentially adding stress to the economy as President-elect Joe Biden organizes his administration.
In a letter to Fed Chair Jerome Powell, Mnuchin said the $455 billion allocated to Treasury under the CARES Act last spring, much of it set aside to support Fed lending to businesses, nonprofits and local governments, should be instead available for Congress to reallocate. The decision comes as data shows the early fast recovery from a historic plunge in the economy is fading, with more than 10 million who had jobs in January still out of work “I am requesting that the Federal Reserve return the unused funds to the Treasury,” Mnuchin said in a letter to Powell, declining to extend programs the central bank has said were critical to assuring credit flowed to all parts of the economy during the worst economic downturn in a century. The announcement was not expected by Fed officials, who had said this week that the programs should be extended, and told Mnuchin so immediately after his decision was made public. In an emailed statement, the Fed 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.’’
