Economy

Secy Mnuchin asks Fed to return $455B of COVID relief funds

Secy Mnuchin asks Fed to return $455B of COVID relief funds”

Treasury Secretary Steven Mnuchin on Thursday said he had asked the Federal Reserve to return unused coronavirus stimulus money. Although the programs were not used extensively, Fed officials felt their presence reassured financial markets and investors that credit would remain available to help businesses, local agencies and even nonprofits through the pandemic downturn.

"The Federal Reserve 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", the Fed said.

These are the programs Mnuchin said would not be extended after the end of the year, and requested that the Fed return $455 billion in unused funds allocated for them.

Treasury Secretary Steven Mnuchin said that lawmakers should redirect unspent stimulus funding, including money he's pulling back from the Federal Reserve, to buoy the economy as the USA waits for a coronavirus vaccine.

The Fed, along with Treasury, established almost a dozen emegency lending programs after the onset of the coronavirus to grease the wheels of credit markets and ensure banks were still able to lend to their customers.

The emergency programs, which were set to expire December 31 unless extended, have doled out billions of dollars in loans to keep the economy afloat.

World financial markets were hit by a wave of uncertainty on Friday after U.S. Treasury Secretary Steven Mnuchin called for an end to coronavirus pandemic relief for struggling businesses, sparking a rare clash between the central bank and Treasury.

More news: Mayo Clinic: 905 staff diagnosed with COVID in past 2 weeks

However, Republican Sen. Pat Toomey of Pennsylvania said in a statement that he approved of Mnuchin's decision.

"I hope that Congress will seriously consider reallocating $580 billion of funds that have already been appropriated that wouldn't cost taxpayers an additional penny", he said in a phone interview on Thursday.

Mnuchin's letter said that, in the "unlikely event" that the shuttered lending facilities are needed again, the Fed could request approval from the Treasury to re-open them, using existing emergency funding from the Treasury new money from Congress.

The move comes after Powell made remarks earlier this week suggesting that he didn't believe the Fed should shut down its emergency facilities just yet. In the letter, Mnuchin said the programs had served their objective.

A Treasury secretary appointed by President-elect Joe Biden would be able to reauthorize the programs upon taking office, but that wouldn't be until late January at the earliest.

The announcement could signal potential trouble for the incoming Biden administration.

"You'll soon hear my choice for Treasury". "You'll find it is someone who I think will be accepted by all elements of the Democratic party, the progressive to moderate coalitions".



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