November 30, 2020

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US Treasury Secretary defends suspension of Fed assistance programs

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United States Treasury Secretary Steven Mnuchin Image: ERIN SCOTT

Washington, 20 Nov 2020 (AFP) – United States Treasury Secretary Steven Mnuchin today defended the decision not to continue with emergency financial assistance programs after the Federal Reserve (Fed) asked to extend them.

Mnuchin said that Congress was “very clear” in its intentions about these programs by putting them into practice until December and argued that the financial markets have stabilized significantly.

However, this stance has been severely criticized by Congressional Democrats and a leading business group, who question the government for limiting the Fed’s action to just a few weeks from the inauguration of President-elect Democrat Joe Biden.

Some lawmakers accuse President Donald Trump’s government – which has yet to admit defeat at the polls – of deliberately sabotaging the economy.

Financial assistance plans were implemented in the second quarter to guarantee liquidity amid the volatility of financial markets.

Mnuchin notified Fed Chairman Jerome Powelll on Thursday that programs for the corporate lending market, as well as programs for small and medium-sized businesses, would not be extended beyond the end of 2020.

Mnuchin asked the Fed to return $ 445 billion in unused funds for the program. Minutes later, the Fed said it “prefers the benefits established during the coronavirus maintained to support (a) the still fatigued and vulnerable economy “of the United States.

Mnuchin called on Friday to reallocate funds to small businesses and others that suffered a devastating blow to the coronavirus.

“We need Congress to reallocate these funds. We could provide an immediate $ 500 billion tax response that will not cost taxpayers money,” he said.

Mnuchin responded evasively when asked if the move is not a way to tie the hands of the Joe Biden government, whose electoral victory was contested by outgoing President Donald Trump.

“This is not a political issue,” said Mnuchin. “This is very simple and the question is really to allow reallocating 500 billion dollars”.

Chamber of Commerce Vice President Neil Bradley called the Treasury’s stance a “surprise”, arguing that it “ties the hands of the elected government prematurely and unnecessarily, and closes the door on important liquidity options for companies when they need it most “.

Source: US Treasury Secretary defends suspension of Fed assistance programs