By David Lawder and Andrea Shalal
WASHINGTON, Nov 20 (.) – US Treasury Secretary Steven Mnuchin dismissed criticism of his decision to withdraw funds from various coronavirus loan programs from the Fed on December 31, saying the next administration it would have a “bazooka” of 800,000 million dollars to appease problems in the financial market.
Mnuchin and another Treasury official insisted on Friday that the measure would not tie the hands of the next Treasury secretary and that business subsidies, plus help with workers’ paychecks and unemployment compensation, were better uses for the $ 455 billion in funds already loaned.
The Treasury chief told CNBC that the portfolio could quickly recapitalize the Fed’s programs if necessary, using part of the $ 84 billion that would remain in the scarcely used Treasury Exchange Stabilization funds along with residual capital from the Fed. Fed.
“As long as they need to be reactivated, we have more than $ 800 billion of capacity, so I think it’s a very good bazooka,” Mnuchin said, adding that markets should be comfortable.
Federal Reserve Chairman Jerome Powell and Chicago Fed Chief Charles Evans criticized the Treasury move, saying the programs – while underused – provided important support to the economy.
“I think the backup role can be very important for quite some time, so it is disappointing,” Evans said on CNBC of the move. “The spread of the virus is increasing and therefore there are risks from that … it would be nice to have more support from all directions.”
DOES NOT SEEK TO OBSTACULATE
Mnuchin asserted that Congress always intended for the loan programs to end on Dec. 31 and sought to reassure markets that the Fed and Treasury had many tools to support the economy.
The official denied that the measure was intended to hamper the administration of President-elect Democrat Joe Biden, who will take office on January 20.
“We are not trying to hinder anything,” Mnuchin said, adding that his department would work closely with the incoming government “if things (elections) are certified.”
A senior Treasury official later told . that up to $ 600 billion in cash from Fed loan funds would be available for repurposing, unused money from aid to airlines and defense firms, as well as $ 130 billion. dollars remaining from the Paycheck Protection Program.
Mnuchin said he and White House Chief of Staff Mark Meadows would speak with Republican leaders in Congress and redouble their efforts to pass more stimulus measures. Senate Leader Mitch McConnell backed Mnuchin’s decision, as did other Republican senators.
“Congress should redirect this money to the kinds of urgent, important and specific relief measures” that Republicans have been advocating for, McConnell said, without mentioning any of the initiatives Democrats have been seeking in new legislation. (Reporting by Andrea Shalal, David Lawder and Richard Cowan in Washington, and Ann Saphir in San Francisco, Written by David Lawder, Edited in Spanish by Manuel Farías)