US Secretary of the Treasury Steven Mnuchin and Federal Reserve Chairman Jerome Powell testify during a Senate Committee on Banking, Housing and Urban Affairs hearing examining the quarterly CARES Act in Washington on September 24.
Senate Majority Leader Mitch McConnell (R-KY) echoed Mnuchin Friday, saying that he supports the idea of repurposing various unused emergency funds, the value of which he pegged at $580 billion.
Mnuchin on Thursday had written Federal Reserve Chairman Jerome Powell announcing his decision not to extend some of the Fed's emergency loan programs, which had been operating with support from the Treasury Department.
"Congress should repurpose this money toward the kinds of urgent, important, and targeted relief measures that Republicans have been trying to pass for months, but which Democrats have repeatedly blocked with all-or-nothing demands", he said Friday.
The next administration would still have an US$800 billion "bazooka" to quell financial market distress, he said.More news: One million people receive experimental Chinese COVID-19 vaccine
Ending support for Fed programs that "could be used for small businesses across the country when they are facing the prospect of new shutdowns is deeply irresponsible", Biden's camp said in a statement.
"A surprise termination of the Federal Reserve's emergency liquidity program, including the Main Street Lending Program, prematurely and unnecessarily ties the hands of the incoming administration and closes the door on important liquidity options for businesses at a time when they need them most", said Neil Bradley, the chamber's executive vice-president, in a prepared statement.
But in a letter to Fed Chairman Jerome Powell, Mnuchin said that the Fed's corporate credit, municipal lending and Main Street Lending programs would not be renewed when they expire on December 31.
Mnuchin added he will be able to help USA businesses without a new COVID-relief bill if the Fed returns its relief funds.
After three months of talks, Mnuchin and White House Chief of Staff Mark Meadows before the election offered to back a $1.9 trillion stimulus bill, which included direct payments, renewed supplemental unemployment insurance payments, and some state and local aid. Mr. McConnell, who has taken the lead in negotiating on the GOP's behalf, has instead pointed to a roughly $650 billion Senate measure as the appropriate fiscal response.More news: Soyuz MC-17 manned spacecraft launched from Baikonur Cosmodrome
Both want Congress to reallocate unspent stimulus funds to support small businesses. Democrats, as well as the Fed, say that removing the safety net of these programs as the virus surges again through the country is not a good idea.
In addition to Mr. Mnuchin's meeting with top Republicans on Friday, Mrs. Pelosi and Mr. Schumer are set to meet Friday with Mr. Biden, who has also called for a large relief bill this year.
"What matters is that if the facilities are there, the market knows that if things go wrong" the Fed will step in if needed, said Roberto Perli, head of global policy research at Cornerstone Macro. It isn't clear how or whether the Treasury Department's decision not to use the money Congress created in March would push lawmakers closer to a deal.
Minutes later, the central bank issued its own statement urging that "the full suite" of facilities be kept in place.
Credit markets for corporations and municipalities froze up earlier this year because of the crisis.More news: RBI panel in favour of letting well-run large NBFCs convert into banks
Among the initiatives that will no longer be able to extend new credit are two facilities that allowed the Fed to buy corporate bonds for the first time.