Treasury, Fed clash over unused funds

Secy Mnuchin asks Fed to return $455B of COVID relief funds

Secy Mnuchin asks Fed to return $455B of COVID relief funds

"Financial conditions are quite strong", Mr Mnuchin said in an interview.

U.S. Treasury Secretary Steven Mnuchin's decision to claw back funds from Federal Reserve coronavirus lending programs will not "hamstring" the next Treasury secretary because the move will leave almost $600 billion in cash that could quickly aid workers and businesses, a senior Treasury official said on Friday.

US President Donald Trump's administration on Thursday moved to end several emergency pandemic lending programs at the Federal Reserve, triggering a rare public rift when the central bank objected to the Department of Treasury's instruction.

"We strongly urge these programmes be extended for the foreseeable future and call on Congress to pass additional pandemic relief targeted at the American businesses, workers and industries that continue to suffer", the chamber said in a statement. The facilities could be reactivated, if needed, with congressional support or with other funds available to the Treasury, he said. Weinberg said. "These are the lifeboats for the economy, these are the places for companies to go when there is no place else to go, whether they are small business or medium-sized businesses, not the big ones that can go to the capital markets, but the little ones". Removing some of the emergency programs has the potential to leave the economy more vulnerable as USA president-elect Joe Biden prepares to take office in January.

Mnuchin said in the letter that these emergency lending facilities, which are set to expire at the end of the year, "have clearly achieved their objective".

Mnuchin sought to extend the Fed's four emergency loan projects for 90 days, but required other projects to expire on December 31 as planned.

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The Fed said Friday it would comply with the Treasury Department's request to return the unused funds that were meant to backstop five emergency lending programs that are expiring. The funds have already been borrowed by Treasury.

Pelosi and Senate Democratic leader Chuck Schumer this week wrote to McConnell asking him to return to the negotiating table on a stimulus bill, but so far have given no indication they're willing to lower their demands for a $2.4 trillion bill.

WASHINGTON (AP) - Treasury Secretary Steven Mnuchin said Thursday he will not extend several emergency loan programs set up with the Federal Reserve, an action that could hamper the ability of the incoming Biden administration to gain important economic support from the central bank to deal with the ongoing pandemic.

McConnell has repeatedly said the starting point for talks should be the $500 billion measure backed by Senate Republicans, which would not provide direct $1,200 stimulus payments to individuals or aid to state and local governments. Democrats, as well as the Fed, say that removing the safety net of these programs as the virus surges again through the country is not a good idea.

"The people who really need this support right now are not the rich corporations - it's the small businesses; the people that are unemployed". That would provide at least one avenue for the Biden administration to provide stimulus without going through Congress. "I think that's very important", Dallas Fed President Robert Kaplan said earlier on Thursday in an interview on Bloomberg TV, referring to the section of the Federal Reserve Act providing the authority for emergency lending.

Credit markets for corporations and municipalities froze up earlier this year because of the crisis.

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