Economy

Biden Reportedly to Choose Janet Yellen as US Treasury Secretary

Biden Reportedly to Choose Janet Yellen as US Treasury Secretary”

Mnuchin plans to place the money into the agency's General Fund, a Treasury Department spokesperson said Tuesday.

Treasury Secretary Steven Mnuchin is putting $455B of unused CARES Act funding into an account that his presumed successor, former Fed Chair Janet Yellen, will need permission from Congress to use, Bloomberg reports, citing a Department spokesperson.

While Mnuchin, a former Goldman Sachs banker, insisted he is attempting to ensure the funds are put to better use, Democratic members of Congress and other observers immediately accused the treasury secretary of a potentially unlawful ploy to hamstring the Biden administration's coronavirus response before the president-elect takes office.

Biden's transition team called the move, which restricts the new administration's ability to backstop financial markets during a worsening pandemic, "deeply irresponsible".

At the end of 2025, according to the CARES Act passed in March, any remaining relief funds should be transferred to the General Fund and used to reduce the budget deficit.

Yet moving the unspent money will make it virtually impossible for Yellen, if confirmed by the Senate as Treasury secretary, to deploy on her own.

More news: Lack of Canadian vaccine production means others could get inoculations first: PM

A Treasury official said on Friday that funds that cover about $ 25 billion in existing loans from the facility will remain in the Treasury, but that any money reimbursed from the loans can not be used for anything else without congressional approval.

The Cares Act spelled out some limitations for the deployment of unused funds beyond January 1, 2021, without specifically mentioning whether that money could be parked in the Treasury's general account. "For its part, the Fed should not go along with this attempted sabotage and should retain the CARES Act funds it already has".

Mnuchin said that many markets are no longer in danger of seizing up and don't need aid beyond next month, when the programs are scheduled to expire.

Mnuchin requested that the funds be reallocated by the now divided Congress, and the Fed has agreed to cooperate with the outgoing treasury secretary's move.

"For companies that are impacted by Covid - such as travel, entertainment and restaurants - they don't need more debt, they need more PPP money, they need more grants", Mnuchin said in an interview last week. Most of the funds that were set aside were spent on emergency lending facilities through the Federal Reserve.



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