Mnuchin said his decision was based on the fact that the programs were not being heavily utilized. He said Friday that
“We're not trying to hinder anything,” Mnuchin said in a CNBC interview. “We don't need this money to buy corporate bonds. We need this money to go help small businesses that are still closed.”
However, critics saw politics at play in Mnuchin's decision, saying the action would deprive the incoming administration of critical support the Fed might need to prop up the economy as coronavirus infections spike nationwide.
“There can be no doubt, the Trump administration and their congressional toadies are actively trying to tank the
Mnuchin on Thursday had written
The decision drew a rare rebuke from the Fed, which said in a brief statement Thursday that the central bank “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.”
Private economists argued that Mnuchin's decision to end five of the emergency loan facilities represents an economic risk.
“While the backstop measure have been little used so far, the deteriorating health and economic backdrop could shine a bright light on the Fed's diminished recession-fighting arsenal and prompt an adverse market reaction,” said
Under law, the loan facilities required the support of the
In his letter to Powell, Mnuchin said that he is requesting that the Fed return to
He said this would allow
After meeting Friday with Mnuchin, Senate Majority Leader
“There is an obvious right use for these hundreds of billions of dollars of already allocated but unused funds,” McConnell said in a statement. “Congress should repurpose the money toward the kinds of urgent, important and targeted relief measures that
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
The future of the
Neither program has lived up to its potential so far, with the Municipal Lending program making just one loan, while the
“Congress’ intent was clear: These facilities were to be temporary, to provide liquidity and to cease operations by the end of 2020,” Toomey said in a statement. ”With liquidity restored, they should expire, as