UPDATE: February 2, 2021: The Special Inspector General for Pandemic Recovery (SIGPR) is investigate Former Treasury Secretary Steven Mnuchin’s November decision to recover unused funds the CARES Act set aside for the Federal Reserve’s emergency lending programs, according to a quarterly report released Monday.
The watchdog also examines what role Sen. Ted Cruz, R-TX, may have played in persuading the Fed to expand the rules governing the now defunct Main Street loan program so that oil and gas companies are eligible, according to the report. . Energy companies represented 13% of loans carried out through the end of November as part of the Main Street program, according to climate advocates BailoutWatch.
The Treasury responded to the SIGPR investigation into the Fed’s facilities on January 19, the last full day of the Trump administration, IG office spokesperson Sarah Breen, told Bloomberg. Former President Donald Trump’s Stimulus Bill signed on December 27 Allayed any concerns about the termination of some Fed facilities at the end of the year and the temporary extension of others, Breen said, adding that the current administration may not agree.
Congressional Democrats and Republicans disagreed over Mnuchin’s interpretation of Treasury powers – he briefly caused a breakup with the Fed – with some saying the recovery was politically motivated to put the then-entering Biden administration at a disadvantage in the continued resumption of the impact of the coronavirus pandemic.
SIGPR did not receive a response to its January 6 letter regarding Cruz’s influence on the Main Street loan program, Breen said.
The move preceded the testimony Tuesday and Wednesday of Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell before lawmakers in both houses of Congress.
During the hearings, Mnuchin defended his demand for the Fed to return $ 455 billion in unspent coronavirus aid, a move that initially triggered a breakup with the central bank and sparked speculation the Republican was deliberately putting money out of the reach of the new Democratic administration Biden before he took office on Jan.20.
Monday’s decision extends through March 31, the Fed’s commercial paper funding facility, the money market mutual fund liquidity facility, the prime brokerage credit facility, and the US dollar liquidity facility. paycheck protection program, which was scheduled to expire on or about December 31.
But it was Mnuchin’s insistence that several other facilities expire at the end of the year – and for the central bank to return unspent funds from the CARES law – that prompted Democratic lawmakers this week to blame the Secretary of the Treasury to play politics.
“You killed the CARES Act loans that were supposed to be a tool to help small businesses and their workers, and buried the money,” Sen. Sherrod Brown, D-OH, said on Tuesday, speaking to Mnuchin at the meeting. of a hearing. according to Bloomberg.
“If I were political I would not have extended the other four installations,” Mnuchin told the telephone service later that day. These programs were not part of the CARES Act.
Mnuchin testified to lawmakers that he was required by law to move the $ 455 billion in unspent money, saying it was “implausible” that Congress had allowed him to make loans “in perpetuity.”
“I intend to follow the law completely, and the law requires that the amounts be transferred,” Mnuchin told the Senate Banking Committee on Tuesday. “You must read here that there was a loophole in the law that allowed me to invest the $ 500 billion forever.”
At the same hearing, Powell supported Mnuchin’s interpretation. “We accept this reading of the law,” he said, adding that Congress had given the Secretary of the Treasury “exclusive” power over the funds in the CARES Act and that the Fed and the next Secretary of the Treasury could. still access about $ 74 billion in the Treasury’s foreign exchange stabilization. Fund, from which unspent coronavirus aid would be transferred.
Mnuchin pushed lawmakers to pass legislation reallocating unspent funds.
“My only top priority would be to activate the $ 140 billion in unspent PPP funds that we could immediately send to the hardest hit small businesses with dramatically declining revenues,” Mnuchin said, according to American banker.
Representative Anthony Gonzalez, R-OH, said Wednesday the pressure to pass a bipartisan stimulus bill must come from Democrats. “I hope they will use the leverage they have to encourage the speaker to bring forward a genuine bipartisan bill,” he said, according to American Banker.
But it was Senate Majority Leader Mitch McConnell, R-KY, who on Tuesday rejected a proposed $ 908 billion bipartisan coronavirus stimulus package that would have included $ 288 billion in assistance to small businesses such as PPP loans, $ 160 billion in aid to state and local governments, and $ 180 billion to fund a supplementary unemployment benefit of $ 300 per week until March, CNBC reported.
Senator Tom Cotton, R-AR, in Tuesday’s hearing defended Mnuchin’s demand to recover unspent funds, saying Democrats “would like to have a $ 454 billion slush fund” for the new administration Biden, The Wall Street Journal reported.
While Mnuchin was firm that his motivation was purely from a legal standpoint, Senator Bob Menendez, D-NJ, said: “Ending these facilities is not mandated by law.”
Powell said that “any central banker would tell you it is premature to withdraw support for the economy,” but added that support would have to come in the form of new legislation.
“We can both recognize progress and point out how far we have yet to go,” he said, referring to himself and Mnuchin, adding that upcoming vaccines signify hope for recovery. “We can see the end,” Powell said, according to the Wall Street Journal. “We just have to make sure we get there.”