Mnuchin defends ending some Fed lending programs

Central bank’s rebuke of Treasury secretary’s move reveals rift.

Treasury Secretary Steven Mnuchin on Friday defended his decision to end several emergency Federal Reserve lending programs, arguing the funding should be redirected toward more distressed parts of the U.S. economy.

The central bank sharply condemned Mnuchin’s decision in an extraordinary rebuke on Thursday that revealed a rift between Mnuchin and Federal Reserve Chair Jerome Powell, who had worked closely together to stabilize the economy since the pandemic began.

Mnuchin said Friday that Congress intended the programs to expire at the end of the year and that the central bank’s interpretation was mistaken. Asked about the Federal Reserve’s criticism by CNBC, Mnuchin fired back: “They weren’t in the room. That’s not their job.”

The split between the government entities most responsible for safeguarding the economy comes at a perilous moment for the country, with coronavirus cases surging and fears mounting of economic headwinds to businesses.

Mnuchin emphasized most of the aid in the expiring programs that has not been used could be better spent to help unemployed Americans and small businesses hard- hit by the pandemic. Congressional Democrats have condemned the decision as intended to limit the tools available to President- elect Joe Biden to boost the economy.

The Treasury Department’s move would end the Fed’s emergency lending facilities, including the Main Street lending program and municipal liquidity facility. Democrats also said Mnuchin’s decision could make it more difficult for Biden to use the funding to aid distressed sectors of the American economy without approval from Congress.

Mnuchin said small businesses and the unemployed “are the people we need to help the next few months,” not big corporations, and called on Congress to re- appropriate the funding. “Let’s go use this money in parts of the economy that need it.”

Mnuchin said he and White House Chief of Staff Mark Meadows would meet with Senate Majority Leader Mitch Mcconnell and House Minority Leader Kevin Mccarthy on Friday to design a plan to negotiate a stimulus deal with congressional Democrats.

TONI L. SANDYS/ WASHINGTON POST Treasury Secretary Steve Mnuchin ( left) and Federal Reserve Chair Jerome Powell had worked closely together to stabilize the economy since the pandemic began.