By Paul Kiernan and Andrew Duehren
WASHINGTON -- Treasury Secretary Steven Mnuchin on Friday
defended his decision not to extend funding for several Federal
Reserve lending facilities, calling on Congress to reappropriate
the nearly $500 billion to help small businesses and unemployed
The Treasury Department's announcement Thursday that it would
allow the funding to expire after Dec. 31 prompted a rare statement
of objection from the Fed, which wants to maintain the lending
programs as a backstop in the face of the continuing coronavirus
It also fueled speculation by some commentators that the Trump
administration was attempting to constrain President-elect Joe
Biden's ability to respond to the economic fallout from the
pandemic as Covid-19 cases surge in the U.S.
"We're not trying to hinder anything," Mr. Mnuchin said in an
interview Friday on CNBC. "It was very clear that the congressional
intent is [that the money] expires on December  of this year.
It's very clear in the law."
Fed lawyers and several lawmakers involved in drafting the Cares
Act, which allocated $454 billion to support direct lending by the
central bank to swaths of the economy, have expressed disagreement
with that view or suggested the Treasury could have asked Congress
to approve a reauthorization.
The Fed said Thursday that it "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."
Mr. Mnuchin played down that concern Friday and noted that the
central bank will remain capable of supporting credit markets to
the tune of some $800 billion using existing funds. "You know, all
of the things being equal, the Fed always likes to keep their tools
outstanding," he said.
He noted that programs created by the central bank since March
to buy corporate bonds and lend directly to midsize companies and
local governments used only a tiny fraction of their capacity.
Policy makers have acknowledged that is partly because early
iterations of the tools were too narrow and designed to limit
Economists have also said the sectors of the economy hardest-hit
by the pandemic -- including small businesses, restaurants and
hotels -- need grants more than they need loans.
"We don't need to buy more corporate bonds," Mr. Mnuchin said.
"We need this money to go help small businesses that are still
closed or hurt, no fault of their own. Or people who are going to
be on unemployment, and unemployment is running out."
Negotiations between the Trump administration, Senate
Republicans and House Democrats over the terms of additional
economic relief have been deadlocked for months. It isn't clear how
or whether the Treasury Department's decision not to use the money
Congress created in March would push lawmakers closer to a
"We'll be redoubling our efforts to sit down and try to get
something done," Mr. Mnuchin said.
The Treasury secretary spoke with White House chief of staff
Mark Meadows and Senate Majority Leader Mitch McConnell (R., Ky.)
on Friday. Mr. Mnuchin said on CNBC that they hoped "to come up
with a plan to sit down with [House Speaker Nancy] Pelosi and
[Senate Minority Leader Chuck] Schumer and try to get a targeted
bill done for the people that really need it."
Mr. McConnell said Congress should use the untapped Federal
Reserve funds for a coronavirus relief bill.
"Congress should repurpose this money toward the kinds of
urgent, important, and targeted relief measures that Republicans
have been trying to pass for months, but which Democrats have
repeatedly blocked with all-or-nothing demands," he said
Mrs. Pelosi (D., Calif.) called Mr. Mnuchin's decision "another
misguided act of irresponsibility," saying the action could imperil
the next administration's ability to take steps to shore up the
economy and instill confidence in the markets.
"They want to impede the ability of the next administration to
have everything available to them," Mrs. Pelosi said Friday.
Before the election, Mr. Mnuchin led talks for Republicans in
discussing a roughly $2 trillion package with Mrs. Pelosi. But
Senate Republicans have repeatedly expressed opposition to a deal
as large as the one Mr. Mnuchin discussed with Democrats. Mr.
McConnell, who has taken the lead in negotiating on the GOP's
behalf, has instead pointed to a roughly $650 billion Senate
measure as the appropriate fiscal response.
The latest effort to pass a coronavirus-relief bill comes as
lawmakers are also working to craft must-pass spending legislation
before the end of Dec. 11. Lawmakers and aides see attaching
coronavirus-relief measures to the spending bills as the most
likely avenue for providing more aid this year.
Staff for the top four leaders in Congress -- Mr. McConnell,
Mrs. Pelosi, Mr. Schumer (D., N.Y.) and House Minority Leader Kevin
McCarthy (R., Calif.) -- met Thursday afternoon to discuss an
agreement on spending. As part of that discussion, the staff also
talked about possible coronavirus aid, according to Democratic
In addition to Mr. Mnuchin's meeting with top Republicans on
Friday, Mrs. Pelosi and Mr. Schumer are set to meet Friday with Mr.
Biden, who has also called for a large relief bill this year.
Write to Paul Kiernan at email@example.com and Andrew Duehren
(END) Dow Jones Newswires
November 20, 2020 16:47 ET (21:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.