Treasury Secretary Steven Mnuchin requested the Federal Reserve return almost half a trillion dollars in unused funds and eliminate five emergency COVID-19 relief facilities established under the CARES Act.
He asked that excess funds established by the act be given back so Congress could “re-appropriate” them.
“I am requesting that the Federal Reserve return the unused funds to the Treasury,” Mnuchin wrote in a letter sent to Fed Chairman Jerome Powell on Thursday. “This will allow Congress to re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds.”
The money was included in the $2.2 trillion CARES Act that steadied markets at a time of unprecedented restrictions placed on travel and business by state and federal governments.
The five facilities requested to be shuttered by Mnuchin are the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Main Street Lending Program, the Term Asset-Backed Security Loan Facility, and the Municipal Liquidity Facility.
Mnuchin said the facilities “have clearly achieved their objective.” Officials with the Federal Reserve, however, said it was wrong to let the facilities expire in a terse response to Mnuchin on Thursday.
“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,” the central bank responded.
Republican Sen. Pat Toomey, who was instrumental in the writing of the CARES Act, agreed with Mnuchin’s call for the money to be returned.
“Congress’s intent was clear: These facilities were to be temporary, to provide liquidity, and to cease operations by the end of 2020. With liquidity restored, they should expire, as Congress intended and the law requires, by Dec. 31, 2020,” Toomey said.
