Treasury Secretary Steven Mnuchin on Thursday said he had asked the Federal Reserve to return unused coronavirus stimulus money.
He as essentially rejected the central bank’s request for a 90-day extension for four emergency lending programs.
All emergency programs created by the Cares Act, the stimulus President Donald Trump signed earlier this year, will expire by Dec. 31, Mnuchin said in a statement.
The Federal Reserve has responded:
"The Federal Reserve 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."
Meanwhile, the move has been supported by Senator Toomey:
I applaud Treasury Secretary Steven Mnuchin’s decision to wind down, by year-end, the CARES Act’s temporary, emergency lending facilities, as Congress intended and the law requires.— Senator Pat Toomey (@SenToomey) November 19, 2020
These facilities, which were established in response to the unprecedented market turmoil caused by the COVID-19 pandemic earlier this year, have successfully achieved their intended purpose:— Senator Pat Toomey (@SenToomey) November 19, 2020
stabilizing credit markets so private credit could once again flow to businesses, states, and municipalities.— Senator Pat Toomey (@SenToomey) November 19, 2020
These temporary facilities helped to both normalize markets and produce record levels of liquidity. Congress’s intent was clear: these facilities were to be temporary, to provide liquidity, and to cease operations by the end of 2020.— Senator Pat Toomey (@SenToomey) November 19, 2020
With liquidity restored, they should expire, as Congress intended and the law requires, by December 31, 2020.— Senator Pat Toomey (@SenToomey) November 19, 2020
Fed Chairman Jerome Powell had requested an extension of the Commercial Paper Funding Facility, the Money Market Liquidity Facility, Primary Dealer Credit Facility, and the Paycheck Protection Program Liquidity Facility.
The markets will weigh the prospects of a spreading virus, lockdowns and how Congress is going to manage the risks to the economy with fiscal stimulus.
The uncertainty in markets will hamstring risk assets.
However, Senate Majority Leader Mitch McConnell, R-Ky., has agreed to resume negotiations with Democrats, Sen. Chuck Schumer, D-N.Y., said on Thursday.
“Last night, they’ve agreed to sit down and the staffs are going to sit down today or tomorrow to try to begin to see if we can get a real good Covid relief bill,” the minority leader said during a press conference in New York.
“So there’s been a little bit of a breakthrough in that McConnell’s folks are finally sitting down and talking to us.”
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