Fed, Treasury Secretary Mnuchin at odds over letting emergency lending programs expire
Source: Yahoo! Finance
Fed, Treasury Secretary Mnuchin at odds over letting emergency lending programs expire
Brian Cheung·Reporter
Thu, November 19, 2020, 5:29 PM EST · 3 min read
U.S. Treasury Secretary Steven Mnuchin has instructed the Federal Reserve to close down its emergency lending facilities and return unused money designed to support small- and medium-sized businesses and state and local governments. ... The Fed counters that doing so would be a huge mistake, a rare instance of public disagreement between the two government bodies that have spent the last eight months engineering a response to the sharpest recession since the Great Depression.
"While portions of the economy are still severely impacted and in need of additional fiscal support, financial conditions have responded and the use of these facilities has been limited," Mnuchin told Fed Chairman Jay Powell in a letter dated November 19. ... In his letter, Mnuchin ordered the Fed to let nine of its 13 emergency facilities expire on December 31: two backstopping corporate bond markets (Primary, Secondary Market Corporate Credit Facilities), five offering loans to small- and medium-sized businesses (Main Street Lending Program), one offering credit to state and local government bond issuers (Municipal Liquidity Facility), and one backstopping markets for asset-backed securities (Term Asset-Backed Securities Loan Facility).
Mnuchin's letter adds that the Fed will have to return unused money back to the Treasury, estimated to be about $429 billion, once the targeted facilities close down. ... The Fed begged to differ, arguing that financial markets and the economy still need the backstops. Economists have warned of the threat of more shutdowns as COVID-19 cases break new highs across the country.
"The Federal Reserve 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," the central bank said in a statement Thursday afternoon.
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Read more: https://finance.yahoo.com/news/federal-reserve-treasury-at-odds-over-letting-emergency-lending-programs-expire-222946692.html
Hat tip, a thread at Popehat
The Fed and the Treasury have teamed up over the last eight months to engineer a response to the deepest economic recession since the Great Depression.
that relationship was fine until this afternoon
a breakdown of the breakdown:
Link to tweet
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"Mnuchin’s letter adds that the Fed will have to return unused money back to the Treasury, estimated to be about $429 billion, once the targeted facilities close down. ... The Fed begged to differ, arguing that financial markets and the economy still need the backstops. Economists have warned of the threat of more shutdowns as COVID-19 cases break new highs across the country."
Trump is gathering all the taxpayer money that isn't being used at the moment, and he'll disburse it as "parting gifts" to loyalists. Of course Trump will receive the lion's share, but even if you received a paltry 1% you'd stand to have a $4 billion windfall. Even for "The Mnuch" that ain't chickenfeed. His gold-bricking wife will want half of that just to remain on "The Mnuch's" arm for the near future.
