Fed, Treasury Secretary Mnuchin at odds over letting emergency lending programs expire

[Eugene]

5. The NYT concurs.

Mnuchin to End Key Fed Emergency Programs, Limiting Biden (New York Times)

The Treasury Department asked the Federal Reserve to return unused funds, downsizing the next secretary’s ability to restart the economic support.

WASHINGTON — Treasury Secretary Steven Mnuchin said he does not plan to extend several key emergency lending programs beyond the end of the year and asked the Federal Reserve to return the money supporting them, a decision that could hinder President-elect Joseph R. Biden Jr.’s ability to use the central bank’s vast powers to cushion the economic fallout from the virus.

Mr. Mnuchin on Thursday said he would not continue Fed programs, including ones that support the markets for corporate bonds and municipal debt and one that extends loans to midsize businesses. The emergency efforts expire at the end of 2020, but investors had expected some or all of them to be kept operational as the virus continues to pose economic risks.

The pandemic-era programs are run by the Fed but use Treasury money to insure against losses. They have provided an important backstop that has calmed critical markets since the coronavirus took hold in March. Removing them could leave significant corners of the financial world vulnerable to the type of volatility that cascaded through the system as virus fears mounted in the spring.

By asking the Fed to return unused funds, Mr. Mnuchin could prevent Mr. Biden’s incoming Treasury secretary from quickly restarting the efforts at scale in 2021.

-snip-

https://www.nytimes.com/2020/11/19/business/economy/mnuchin-fed-emergency-programs.html