US Federal Reserve Chairman Jerome Powell said that the central bank will return unused funds of the emergency Covid-19 lending facilities to the Treasury Department.
“You have indicated that the limits on your authority do not permit the CARES Act facilities to make new loans or purchase new assets after December 31, 2020, and you have requested that we return Treasury’s excess capital in the CARES Act facilities,” Xinhua news agency quoted Powell as saying in a letter to Treasury Secretary Steven Mnuchin on Friday.
“We will work out arrangements with you for returning the unused portions of the funds allocated to the CARES Act facilities in connection with their year-end termination,” Powell added.
The letter came a day after Mnuchin asked the Fed to end five emergency Covid-19 lending facilities and return $455 billion of unused funds.
In a letter to Powell on Thursday, Mnuchin said that these emergency lending facilities, which are set to expire at the end of the year, “have clearly achieved their objective”.
In March, Congress approved a $2.2 trillion Covid-19 relief bill known as the CARES Act, which provided the Treasury around $500 billion to set up a variety of emergency lending facilities through the Fed and guarantee loans.
But the Chamber of Commerce, the largest lobbying group in the country, urged the administration to extend these emergency lending programs for the foreseeable future amid a record surge in Covid-19 cases across the country.
“With the coronavirus surging in communities around the nation and American businesses facing mounting challenges, we need the government’s full support by providing the resources necessary for broad-based economic recovery,” Chamber executive vice president and chief policy officer Neil Bradley said on Thursday in a statement.
“A surprise termination of the Federal Reserve’s emergency liquidity programs, 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.
“We strongly urge these programs be extended for the foreseeable future and call on Congress to pass additional pandemic relief targeted at the American businesses, workers and industries that continue to suffer,” he added.