WASHINGTON: US Treasury Secretary Steven Mnuchin on Friday defended a decision to not continue a series of emergency lending programs after the Federal Reserve called for the initiatives to be extended. Mnuchin, appearing on CNBC, said Congress was "very clear" in its intent about the programs, calling for them to expire in December.
The programs were enacted in the spring to boost liquidity amid turmoil in financial markets. But financial conditions today are "in great shape," Mnuchin said. "When the emergency is over, let's put them away."
On Thursday, Mnuchin notified Fed Chair Jerome Powell that programs targeting the corporate credit market, municipal lending and small and medium-enterprises through the Main Street Lending Program would not last beyond the end of 2020.
Mnuchin requested that the Fed return $455 billion in unused funds allocated for the program. Minutes after Mnuchin's announcement, the Fed on Thursday night sent out its own statement, saying it "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."
On Friday, Mnuchin called for the funds to be redeployed to small businesses and other parties that have suffered a devastating blow from the coronavirus.