The secretary of United States Treasury, Steven Mnuchin, canceled emergency loans Federal Reserve (Fed) approved to deal with the pandemic and said those funds should be reallocated by Congress.
Speaking to the CNBC television network, Mnuchin defended on Friday his decision to terminate these Fed programs on December 31 and assured that it is not a political decision but simply follows the intention of the law.
Mnuchin’s decision, which was announced in a letter Thursday to Fed Chairman Jerome Powell, drew criticism from the head of the US central bank, who said these funds are necessary to prop up the economy while the move continues. coronavirus pandemic.
This is $ 455 billion from the $ 2 trillion stimulus package approved by Congress in March to bolster the economy in the face of the crisis, which includes programs that expire on December 31.
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That $ 455 billion has not been used and, according to Mnuchin, should be reallocated by Congress for other purposes.
The decision would force an end to several programs that were meant to help companies that have been struggling to survive the economic effects of the pandemic.
The Fed’s programs “have clearly achieved their objective. The markets responded positively, the spreads (in the markets) tightened and the banks continued to make loans,” Mnuchin wrote in his letter to Powell.
In an unusual reaction, the Fed responded in a statement that it “would prefer that all emergency measures established during the pandemic of coronavirus to fulfill its important role in supporting the still tense and vulnerable economy “
Powell had already spoken out earlier this week against the suspension of these programs, considering it premature.
In his remarks to CNBC, Mnuchin said the markets should feel “very comfortable” because the Fed still has a lot of responsiveness.
“To the extent that it is necessary to reactivate them (these programs), we have more than 800,000 million dollars of capacity,” he added, while rejecting that his intention is to harm the government of the president-elect, Joe Biden.
“We are not trying to hinder anything,” said the Secretary of the Treasury, while assuring that “if things are certified”, his department will work with the transitional government of Biden.
The US Chamber of Commerce also criticized the decision, warning that it “closes the door to important liquidity options for companies when they need them most”, adding that it “unnecessarily ties the hands of the incoming administration.”
President Donald trump he still does not acknowledge his defeat in the November 3 elections and maintains his accusations that he was the victim of “widespread electoral fraud” that he has failed to prove.