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        <title><![CDATA[Treasury wants to end COVID-19 loan programs — and the Fed isn&#8217;t happy]]></title>
        <atom:link href="https://usagag.com/2020/11/20/treasury-wants-to-end-covid-19-loan-programs-and-the-fed-isn-8217-t-happy/" rel="self" type="application/rss+xml" />
        <link>https://usagag.com/2020/11/20/treasury-wants-to-end-covid-19-loan-programs-and-the-fed-isn-8217-t-happy/</link>
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            <media:title type="html">Treasury wants to end COVID-19 loan programs — and the Fed isn&#8217;t happy</media:title>
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						<p>The Trump administration plans to pull the plug on five loan programs that supported the economy during the coronavirus crisis — prompting a rare objection from the Federal Reserve.</p>
<p>Treasury Secretary Steven Mnuchin said his department won&#8217;t renew <strong>the emergency programs</strong> — which shored up the corporate bond market, municipal governments and struggling Main Street businesses — after they expire on Dec. 31.</p>
<p>Mnuchin also asked the Fed on Thursday to return all unused funding for the programs that came from the CARES Act stimulus bill, which he said would allow Congress to &#8220;re-appropriate&#8221; $455 billion for other coronavirus aid efforts.</p>
<p>But the usually staid central bank issued a blunt statement opposing the move, saying it &#8220;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.&#8221;</p>
<p>Fed Chairman Jerome Powell and other bank honchos have argued in recent months that the economy <strong>needs more government support</strong>&nbsp;to fuel the fragile recovery from the massive economic downturn the pandemic has caused.</p>
<p>Powell said Tuesday that it was not yet time to wind down the emergency lending programs amid a nationwide surge in coronavirus infections, adding that the economy had &#8220;a long way to go&#8221; before it&#8217;s fully healed.</p>
<p>But Mnuchin argued that the facilities &#8220;have clearly achieved their objective&#8221; of reducing pressure on banks and improving access to credit. He said the Fed could seek approval to restart the programs if they&#8217;re needed again and expressed support for extending other programs that weren&#8217;t funded by the CARES Act.</p>
<p>The secretary also noted that &#8220;use of these facilities has been limited&#8221; — the municipal lending program has made just one loan and the Main Street lending initiative has loaned just about $4 billion to roughly 400 companies.</p>
<p>Sen. Pat Toomey, a Pennsylvania Republican who sits on the Senate Finance Committee, backed Mnuchin&#8217;s move, saying the programs were only meant as a short-term backstop.</p>
<p>&#8220;Congress’ intent was clear: These facilities were to be temporary, to provide liquidity and to cease operations by the end of 2020,&#8221; Toomey said in a statement.</p>
<p>But Rep. James Clyburn (D-South Carolina) said there was &#8220;no justification&#8221; for Mnuchin&#8217;s decision to cut off the programs on his way out of the White House.</p>
<p>&#8220;These programs are part of a comprehensive set of tools Congress gave the Federal Reserve to combat the pandemic-related economic crisis, and ending them in the midst of the crisis would undermine the economic recovery,&#8221; said Clyburn, who chairs the House&#8217;s Select Subcommittee on the Coronavirus Crisis.</p>
<p><em>With Post wires</em></p>
			
					
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