Mnuchin Plans to Put $455 Billion Beyond Yellen's Easy Reach

Andrew Cummings
November 26, 2020

U.S. Federal Reserve policymakers discussed how the central bank's asset purchases could be adjusted to provide more support to markets and the economy during the November policy setting meeting.

That amount includes money that Mnuchin is yanking from the Federal Reserve and unused loans for companies.

Mnuchin insists that he is following the letter of the law in sunsetting the Fed's Cares-related lending programs.He said that many markets are no longer in danger of seizing up and don't need aid beyond next month, when the programs are scheduled to expire.

While Mnuchin, a former Goldman Sachs banker, insisted he is attempting to ensure the funds are put to better use, Democratic members of Congress and other observers immediately accused the treasury secretary of a potentially unlawful ploy to hamstring the Biden administration's coronavirus response before the president-elect takes office. The Fed publicly objected to the move, but agreed to return the funds to the Treasury.


Some analysts raised questions about whether the move was even legal.

"One thing is for sure and that is there is unlikely to be as many Fed-Treasury spats", said Chris Rupkey, chief financial economist at MUFG Union Bank in NY.

"This is Treasury's latest ham-handed effort to undermine the Biden administration".

The coronavirus funds were earmarked for pandemic-related lending programs under the terms of the CARES Act. "The good news is that it's illegal and can be reversed next year", Bharat Ramamurti, a member of the Congressional Oversight Commission that oversees Cares Act funding, said.


Ernie Tedeschi, a former Treasury Department economist, said it was a "dangerous move" ahead of what is expected to be a devastating winter.

"The avalanche of mixed US data today had little impact on the United States dollars, and it appeared traders were more focused on pre-Thanksgiving holiday position adjustments than anything else", Ronald Simpson, managing director, global currency analysis at Action Economics, said in a note.

Biden's transition team called the move, which restricts the new administration's ability to backstop financial markets during a worsening pandemic, "deeply irresponsible".

We still need to raise $18,000 to keep Truthout online. "We need this money to go help small businesses that are still closed or hurt - no fault of their own - or people who are going to be on unemployment that's running out", he said.


"As the economy backslides amid skyrocketing Covid-19 cases, Secretary Mnuchin is engaged in economic sabotage, and trying to tie the Biden administration's hands", Wyden said in a statement to Reuters on Tuesday.

Other reports by iNewsToday

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