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Treasury Secretary Steven Mnuchin speaks with reporters about the coronavirus relief talks earlier this fall at the U.S. Capitol. Getty Images
Treasury Secretary Steven Mnuchin on Friday denied that his decision to end several Federal Reserve emergency loan programs was aimed at crippling the new Biden administration.
On Thursday, Mnuchin unexpectedly announced that he was ending several joint loan programs and asked the Fed to return the $ 450 billion to the Treasury so it can be returned to Congress. As part of a post-financial crisis reform, the Fed now needs the approval of the Treasury Secretary before it can set up emergency lending programs.
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Some analysts have speculated overnight that cutting that funding would limit the ability of the Biden administration to quickly adjust programs as it sees fit.
“We’re not trying to interfere with anything. We are following the law, ”Mnuchin said in an interview on CNBC.
“I am careful and I return the money to Congress like I’m supposed to,” he said. “It is not a political decision.”
Mnuchin said his decision freed up $ 500 billion for Congress to use “it won’t cost taxpayers more money.”
Mnuchin described his decision in populist terms.
“The people who really need the support right now aren’t the wealthy businesses, it’s the small businesses,” Mnuchin said.
“We don’t need to buy more corporate bonds,” he added.
Earlier in another interview, Chicago Fed Chairman Charles Evans said lending programs play an important supporting role for financial markets that could be important for the future and that the decision to ending it was disappointing.
Asked about his response to Evans, the Treasury Secretary said central bankers never like to lose any of their tools.
“The markets should be very comfortable, we still have a lot of capacity” without these funds in the event of future disruptions, he said.
And the financial conditions “are in great shape,” he added.
Stocks opened lower on Friday, with the S&P 500 SPX index,
a slight drop of 0.08% in morning trading.
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