Rare Mnuchin-Powell spat takes center stage during COVID-19 hearing

A rare public break between the Secretary of the Treasury Steven MnuchinSteven Terner Mnuchin Financial groups applaud choice of Biden Treasury Yellen sanctions Chinese company for doing business with Maduro regime Monumental economic challenges await Biden Secretary of the Treasury MORE and Federal Reserve Chairman Jerome Powell took center stage in a Senate hearing on Tuesday as Republicans and Democrats argued over the expiration of coronavirus relief.

Democrats were eager to exploit the fallout from Mnuchin’s recent decision to shut down $ 454 billion in emergency Fed loans put in place through the $ 2.2 trillion CARES bill, a move that drew public criticism from Powell.

While the Fed initially disagreed with Mnuchin’s decision, Powell eventually gave in and agreed to return unused credit protections by December 31 without approving the Treasury Secretary’s decision.

Mnuchin and Powell both sought to minimize the rift before the Senate Banking Committee on Tuesday by relying on the authority of the other and carefully skirting disagreements. Mnuchin insisted he was simply meeting a legal deadline to end some programs by the end of the year, and Powell said the Fed was not challenging Mnuchin’s legal authority to make the call.

“We think we would have left facilities in place to act as a safety net. We are not questioning the Secretary’s decision regarding the CARES Act money, as it is entirely his decision to make. But I think central banks generally would have done that, ”Powell said.

But enraged Democrats, who insist lending facilities could be crucial if third wave COVID-19 caused more financial turmoil, urged Powell to take a stronger stand against what they called a politically motivated move. motivated to undermine the economy before Mnuchin left on January 20. .

“My decision not to expand these facilities was not an economic decision,” Mnuchin told senators. “I find it implausible that a member of this committee believed that by voting for the CARES law, you were authorizing me to invest $ 500 billion to make loans in perpetuity.

Mnuchin’s defense has done little to temper the reaction of Democrats in the Senate.

“It appears that you and the president and others in the current administration are trying to spend your last days in power preemptively sabotaging the efforts of the next administration to clean up your mess,” the senator said. Sherrod brownSherrod Campbell Brown Biden’s budget pick sparks battle with GOP Senate Warren, Brown’s voice support for Biden’s controversial budget office pick Biden’s economics team receives mixed reviews from Republicans of the Senate PLUS (Ohio), the panel’s rank Democrat.

The dispute is over a timeframe set in the CARES law on what needs to be done with several loan facilities that have been backed by $ 454 billion in credit protection thanks to the massive stimulus bill. The resulting law stated that loan facilities guaranteed by the CARES Act could not “make new loans, loan guarantees or other investments” after December 31.

Mnuchin and Republicans argue the year-end deadline is legally binding. They also insist that the soon-to-be-closed lending facilities have already achieved their goal of stabilizing financial markets and encouraging private lenders to meet the needs of medium-sized businesses and local governments.

“The point is, Congress has trusted both of you with extremely powerful and unprecedented – and yet temporary – emergency tools,” said the senator. Pat ToomeyPatrick (Pat) Joseph Toomey Court of Appeals declares NSA bulk phone data collection illegal Dunford steps down as chair of coronavirus watch group GOP senators are pushing for swift and partial reopening of the PLUS economy (Pa.), Who is in line to become the Banking Committee’s top Republican next year.

“I commend you for working together to deploy these tools for their intended purposes and then putting them away now that that specific goal has been met,” Toomey continued, citing in part Powell’s frequent promise not to abuse programs intended to crises.

Democrats, however, argue that facilities can still modify or extend loans guaranteed by the CARES Act until next year and say there is no reason for Mnuchin to pull funding from these programs if his successor decides or must reopen them later.

“No one will be in a better position when you end the CARES Act installations,” Sen said. Bob menendezRobert (Bob) Menendez Democrats urge YouTube to remove election misinformation, redouble efforts ahead of Georgia run-off Democratic senators urge Facebook to take action against anti-Muslim bigotry Trump’s nominee sparks fury bipartisan for politicizing the news agency READ MORE (DN.J.). “It’s important as an economic safety net.”

Powell had expressed support for expanding the facilities before Mnuchin made the decision to close them.

The disagreement between Mnuchin and Powell marked a turning point in their otherwise close and crisis-stricken relationship. The duo have worked transparently on a wide range of issues within the Trump administration, and their first report helped Powell secure Mnuchin’s recommendation to replace the former Fed chairman. Janet YellenJanet Louise YellenThe Memo: Tension Builds Around Key Biden Nominees Biden Takes Action to Create Diverse Firm On The Money: Biden Announces Key Economics Team Members | GOP open to Yellen as Treasury secretary, opposed to budget choice | GAO: Unemployment data ‘misrepresented’ by Ministry of Labor READ MORE at the end of his term in 2018.

Powell and Mnuchin spent more time on Tuesday congratulating each other on their previous cooperation than dwelling on the loan facility dispute in what will likely be their last joint appearance before a Senate committee. The two will testify before the House financial services committee on Wednesday, but are not expected to make further congressional appearances together before the president-elect. Joe bidenJoe BidenGeraldo Rivera on Trump casting doubt on election results: ‘Enough is enough now’ Senate approves two energy regulators, rounding out Murkowski panel: Trump should concede House race White PLUS begins his term.

Biden on Monday announced his intention to appoint Yellen as Treasury secretary, and his prospects for confirmation appear strong. Powell’s tenure as Fed chairman doesn’t expire until February 2022, which means he will likely enjoy another close working relationship with his Treasury counterpart despite the change in administration.

Until then, Powell and Mnuchin have insisted that Congressional leaders strike a deal on yet another stimulus bill to support hardest-hit workers, businesses and households as the United States braces for a long and intimidating winter with more coronavirus cases, hospitalizations and deaths.

“We can see the end. We just have to get there,” Powell said Tuesday.