Mnuchin Defends Decision to End Emergency Fed Funds: Live Updates
Treasury Secretary Steven Mnuchin defended his decision not to extend critical emergency lending facilities beyond year-end, insisting on Friday that he was following the intent of Congress in calling for the Federal Reserve to return unused money to the Treasury.
“Congress trusted us with this money and we’re going to follow the law,” Mr. Mnuchin said on CNBC.
On Thursday, Mr. Mnuchin informed the Fed that he did not plan to extend several key emergency lending programs beyond the end of the year, prompting a rebuke from the central bank, which 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.”
Investors expected the programs, which expire at the end of the year, to be extended by Mr. Mnuchin, and the decision could hamper efforts by President-elect Joseph R. Biden Jr. to support the economy at a moment when it is continuing to struggle with the pandemic fallout.
Mr. Mnuchin denied politics was at play in his decision and, like other Trump administration officials, would not acknowledge that Mr. Biden would be taking office next year and appointing a new Treasury secretary.
“Whether it’s myself or somebody else, these can be reactivated,” Mr. Mnuchin said, referring to the Fed facilities.
“When this is certified and when the transition is certified, of course, we will work with whoever is the appropriate people to work with,” he said of the transition.
Legal experts say that Mr. Mnuchin’s rationale that he is legally required to end the programs is questionable. Although Mr. Mnuchin claims that it was the intent of lawmakers for the programs to end this year, Democrats in Congress have said publicly they want the programs to be extended.
“There can be no doubt, the Trump administration and their congressional toadies are actively trying to tank the U.S. economy,” Senator Sherrod Brown of Ohio said. “For months, they have refused to take the steps necessary to support workers, small businesses, and restaurants. As a result, the only tool at our disposal has been these facilities. With this action, there can now be no doubt: Steven Mnuchin will go down as the worst Treasury Secretary in our nation’s history.”
In spite of Mr. Mnuchin’s newfound insistence that Congress intended for the programs to sunset at the end of the year, he himself suggested before the election that it would be possible to extend them past Dec. 31. And as recently as earlier this month, a senior Treasury official said that the department was considering extending some of the programs.
Mr. Mnuchin said on Friday that the Treasury’s Exchange Stabilization Fund would give the Federal Reserve sufficient “firepower” to put lending programs in place if needed. He said that the expectation that vaccines would be available in the coming weeks suggested that the economy was in a better position than when the programs were created earlier this year, though health experts do not expect the vaccines to be widely available for several months.
Mr. Mnuchin’s move revealed a rift between the Treasury Department and the Fed, which have been working together to try to prop up the economy in the face of the pandemic. The Federal Reserve chair, Jerome H. Powell, said on Nov. 5 that the two agencies were just beginning to discuss whether the programs should be extended.
Mr. Mnuchin had little to say about any tension between the two men.
“I’ll let Chair Powell speak for himself,” Mr. Mnuchin said.
Article source: https://www.nytimes.com/live/2020/11/20/business/us-economy-coronavirus