The Trump administration plans to unplug the five lending programs that supported the economy during the coronavirus crisis — urging rare opposition from the Federal Reserve.
Treasury Secretary Steven Mnuchin said he would not update the emergency program that underpinned the corporate bond market, local governments and the struggling main street business after it expired on 31 December.
Mr Mnuchin also called on the Federal Reserve Board of Governors on Thursday to return all unused funding for the program from the CARES Act Stimulation Bill. Congress said it could “reallocate” $ 455 billion to other coronavirus aid activities.
However, the normally stagnant central bank issued a frank statement against the move, saying, “A complete suite of emergency facilities established during the coronavirus pandemic remains tense and fragile economic Bucks. I hope to continue to play an important role as a top manager. “
Federal Reserve Board Chair Jerome Powell and other bank Honmachi say the economy needs more government support to facilitate a fragile recovery from the pandemic-induced recession. Insisted for the last few months.
Powell said on Tuesday that it was not the time to end the emergency lending program amid a nationwide surge in coronavirus infections, adding that there was a “long way to go” before the economy fully recovered.
But Mnuchin claimed that he “clearly achieved his goal” to reduce pressure on banks and improve access to credit. He said the Fed could seek approval to resume the program and expressed support for extending other programs not funded by the CARES Act.
The secretary also said that “use of these facilities is restricted.” The municipal lending program is a one-time loan, and the Main Street lending initiative has financed about 400 companies about $ 4 billion.
Senator Pat Toomey, a Republican from Pennsylvania on the Senate Finance Committee, supported Mr Mnuchin’s move, saying the program was intended only as a short-term backstop.
“Parliament’s intentions were clear. These facilities were temporary, provided liquidity and were planned to shut down by the end of 2020,” Toomey said in a statement.
However, Congressman James Cliburn (Republican-South Carolina) said there was “no justification” for Mnuchin’s decision to cancel the program on his way out of the White House.
“These programs are part of a comprehensive set of tools Congress has given to the Federal Reserve to combat a pandemic-related economic crisis, and ending them in the midst of a crisis will bring economic recovery. It will hurt, “said Cliburn, who chairs the House Selection Subcommittee. About the coronavirus crisis.
With post wire
Federal Reserve Fights Treasury Moves to End COVID-19 Program
Source link Federal Reserve Fights Treasury Moves to End COVID-19 Program