November 26, 2020
Treasury Secretary Steven Mnuchin has moved $455 billion in unspent COVID-19 relief capital from the Federal Reserve back into the Treasury’s General Fund—making it much more difficult for his chosen successor, Janet Yellen, to access the emergency funding, The Hill reports.
Indeed, the political news outlet notes, it may require another act of Congress for Mnuchin’s designed successor to deploy COVID relief patyments.
Mnuchin said last week that he was shuttering a handful of the Fed’s emergency lending facilities, a move the central bank opposed in a rare critical statement. While those facilities were little-used during the pandemic, they were seen as confidence boosters for capital markets.
Mnuchin at the time requested the Fed return the funding, which Congress appropriated to cover potential pandemic-related losses, saying the CARES Act from March set a legal deadline for the facilities to expire by year’s end.
CARES Act watchdog, Bharat Ramamurti—appointed by Senate Minority Leader Chuck Schumer (D-New York) last April to oversee the funds—told The Hill that Mnuchin’s move was unlawful. “This is Treasury’s latest ham-handed effort to undermine the Biden Administration,” he said on Twitter. The good news is that it’s illegal and can be reversed next year. For its part, the Fed should not go along with this attempted sabotage and should retain the CARES Act funds it already has.
Neither the Treasury Department nor the Biden transition team immediately responded to a request for comment.
Research contact: @thehill