Mnuchin Defends Decision to End Fed Lending Programs
By Nick Timiraos and Paul Kiernan
WASHINGTON -- Treasury Secretary Steven Mnuchin defended his
decision to allow a suite of emergency lending programs to expire
at the end of the year against criticism from Democrats who said he
had misinterpreted the law that enabled them.
At a House oversight hearing on Wednesday, Mr. Mnuchin said the
$2 trillion Cares Act pandemic relief bill that Congress approved
on a bipartisan basis in March didn't allow him to extend five
emergency loan programs. The Fed and Treasury had established those
programs with some of the $454 billion Congress had made available
in the law.
"This was not a political decision. I was merely implementing
the Cares Act," Mr. Mnuchin said, echoing comments he made on
Tuesday before the Senate Banking Committee.
Mr. Mnuchin also said that the programs weren't needed anymore
and that the money he hadn't approved for the programs, as well as
other funds that wouldn't be needed, would be better used on
another pandemic relief bill.
The Treasury Department's decision last month to allow loan
backstops for corporate, municipal and other credit markets, as
well as a program to support lending to small and midsize
businesses and nonprofits, to expire on Dec. 31 touched off a
partisan fight over whether and how the Biden administration should
be allowed to use the programs.
"There is simply no justifiable reason to take these tools
away," said Rep. Maxine Waters (D., Calif.), chairwoman of the
House Financial Services Committee, before which Mr. Mnuchin and
Federal Reserve Chairman Jerome Powell appeared.
She said Mr. Mnuchin's legal interpretation was flawed.
Legislative proposals Republicans have made in recent months to
rescind the lending programs wouldn't have been necessary if the
Cares Act required the programs to end, Ms. Waters said. Democrats
see the programs as a potential tool for the Biden administration
to deliver more aid to hard-hit businesses, cities and states if
Congress doesn't act to approve more spending.
The Fed issued a rare objection to Treasury's decision last
month, saying it would have preferred to extend the programs until
the pandemic crisis had passed.
"We were concerned that the public might misinterpret [the
Treasury's decision] as the Fed stepping back and thinking our work
is done," Mr. Powell said on Wednesday before the same committee.
"We needed to send a signal to the public to that effect."
Mr. Powell declined to say if the Fed agreed with the Treasury's
reading of the law. "We don't have a role in reading it," he
Write to Nick Timiraos at firstname.lastname@example.org and Paul Kiernan
(END) Dow Jones Newswires
December 02, 2020 12:19 ET (17:19 GMT)
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