Mnuchin said Friday that Congress intended the programs to expire by the end of the year and that the central bank’s interpretation was incorrect. Asked about the Federal Reserve’s criticism of CNBC, Mnuchin fired back: “They were not in space. It’s not their job. “
The division between the government entities most responsible for protecting the economy comes at a dangerous time for the country with coronavirus cases strong and fears of increasing the economic headwinds for companies.
Mnuchin stressed that most of the support in the expired programs has not been used and could be better used to help unemployed Americans and small businesses hard hit by the pandemic. Congressmen have condemned the decision as intended to limit the tools available to President-elect Joe Biden to boost the economy.
The Treasury Department̵
“The people who really need this support right now are not the rich companies – it’s the small businesses; the people who are unemployed. These are the people we need to help over the next few months, “Mnuchin said, urging Congress to reuse the funding. Let’s spend this money in parts of the economy that need them. “
While the Treasury Department has the ability to terminate the programs, however, they do not have the sole authority to reallocate funding to these programs and have to secure Fed agreement.
“The emperor has no clothes, so to speak,” said Joe Brusuelas, chief economist at RSM.
In addition, critics of the draw say Mnuchin could have asked the Fed for some of its unused Cares money while still leaving the emergency loan programs intact. For example, of the $ 454 billion pot allocated by the Treasury Department under the Care Act, only $ 195 billion is specifically committed to cover Fed programs, leaving $ 259 billion that had not.
Mnuchin said he and White House Chief of Staff Mark Meadows would meet with Senate Majority Leader Mitch McConnell (R-Ky.) And House Minority Leader Kevin McCarthy (R-Calif.) On Friday to design a plan to negotiate. a stimulus agreement with Congress Democrats.
Federal Reserve officials continued to criticize the decision Friday. Charles Evans, Chicago Fed president, called CNBC the decision “disappointing.” Maryland Gov. Larry Hogan (R) also condemned the move on CNBC on Friday.
“They need flexibility to provide lending in an emergency,” Hogan said. “I do not really understand the motivation behind it; I think it is a mistake.”
The central bank and the Trump administration seem to offer different views on the ongoing risks to the U.S. economy. The statement from the Federal Reserve on Thursday, which called for maintaining the “full package” of emergency facilities, underscored the need to halt “our still strained and vulnerable economy.”
On Friday, Mnuchin struck a different tone, saying: “The medical emergency may not be over, but I think we agree that the economic situation is in good shape. Corporate bonds have come in; mortgage has come in; the stock market has come back. ”
Mnuchin also said he and Powell had discussed the issue “in detail” and strongly rejected criticism that the decision was designed to handicap Biden. He added about Powell: “I will let him speak for himself and clarify his remarks. … We try to follow the law as we should. ”