The Morning Call

Mnuchin de­nies try­ing to hin­der next administra­tion

Fed, US Cham­ber of Com­merce crit­i­cize sec­re­tary’s de­ci­sion

- By Mar­tin Crutsinger and Christo­pher Ru­gaber Business · Finance · U.S. News · Politics · Washington · Steven Mnuchin · Joe Biden · Federal Reserve System · Donald Trump · Sherrod Brown · Ohio · U.S. Treasury · Kansas City · Philadelphia Union · University of Miami · U.S. Chamber of Commerce · United States of America · Gregory · Oxford University · Jerome Powell · Oxford

WASHINGTON— Trea­sury Sec­re­tary Steven Mnuchin de­nied that he is at­tempt­ing to limit the choices Pres­i­dent-elect Joe Bi­den will have to pro­mote an eco­nomic re­cov­ery by end­ing sev­eral emer­gency loan pro­grams be­ing run by the Fed­eral Re­serve.

Mnuchin said his de­ci­sion was based on the fact that the pro­grams were not be­ing heav­ily uti­lized. He said Fri­day that Congress could make bet­ter use of the money by re­al­lo­cat­ing it in another di­rec­tion to sup­port grants to small busi­nesses and ex­tend un­em­ploy­ment as­sis­tance.

“We’re not try­ing to hin­der any­thing,” Mnuchin said on CNBC. “We don’t need this money to buy corporate bonds. We need this money to go help small busi­nesses that are still closed.”

How­ever, crit­ics saw pol­i­tics at play in Mnuchin’s de­ci­sion, say­ing the ac­tion would deprive the in­com­ing administra­tion of crit­i­cal sup­port the Fed might need to prop up the economy as coro­n­avirus in­fec­tions spike na­tion­wide.

“There can be no doubt the Trump administra­tion and their con­gres­sional toad­ies are ac­tively try­ing to tank the U.S economy,” Sen. Sher­rod Brown, D-Ohio, said in a pre­pared state­ment Fri­day. “For months, they have re­fused to take the steps nec­es­sary to sup­port work­ers, small busi­nesses and restau­rants. As the re­sult, the only tool at our dis­posal has been these fa­cil­i­ties.”

Mnuchin on Thurs­day had writ­ten Fed­eral Re­serve Chair­man Jerome Pow­ell an­nounc­ing his de­ci­sion not to ex­tend some of the Fed’s emer­gency loan pro­grams, which had been oper­at­ing with sup­port from the Trea­sury Depart­ment. The de­ci­sion will end the Fed’s corporate credit, mu­nic­i­pal lend­ing and Main Street Lend­ing pro­grams as of Dec. 31.

The de­ci­sion drew a rare re­buke from the Fed, which said in a brief state­ment Thurs­day that the cen­tral bank “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.”

The U.S. Cham­ber of Com­merce also crit­i­cized the move.

“A sur­prise ter­mi­na­tion of the

Fed­eral Re­serve’s emer­gency liq­uid­ity pro­gram, in­clud­ing the Main Street Lend­ing Pro­gram, pre­ma­turely and un­nec­es­sar­ily ties the hands of the in­com­ing administra­tion and closes the door on im­por­tant liq­uid­ity op­tions for busi­nesses at a time when they need them most,” said Neil Bradley, the cham­ber’s ex­ec­u­tive vice pres­i­dent, in a pre­pared state­ment.

Pri­vate economists ar­gued that Mnuchin’s de­ci­sion to end five of the emer­gency loan fa­cil­i­ties rep­re­sents an eco­nomic risk.

“While the back­stop mea­sure have been lit­tle used so far, the de­te­ri­o­rat­ing health and eco­nomic back­drop could shine a bright light on the Fed’s di­min­ished re­ces­sion-fight­ing ar­se­nal and prompt an ad­verse mar­ket re­ac­tion,” said Gre­gory Daco, chief U.S. economist at Ox­ford Eco­nom­ics.

Newspapers in English

Newspapers from USA