US Treasury Secretary Steven Mnuchin has asked the Federal Reserve to end five emergency Covid-19 lending facilities and return $455 billion of unused funds.
“I am requesting that the Federal Reserve return the unused funds to the Treasury,” Mnuchin wrote in a letter 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,” he added.
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, reports Xinhua news agency.
Mnuchin said in the letter that these emergency lending facilities, which are set to expire at the end of the year, “have clearly achieved their objective”.
“While portions of economy are still severely impacted and in need of additional support, financial conditions have responded and the use of these facilities has been limited,” he said.
Mnuchin noted that “in an abundance of caution”, he requested the central bank to extend for another 90 days four of the emergency lending facilities — the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, the Money Market Liquidity Facility and the Paycheck Protection Program Liquidity Facility, while shutting down another five facilities.
However, the Fed wanted to continue all these emergency facilities.
“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 Fed said in a statement.
Earlier this week, Powell said that it’s premature to shut down these emergency facilities now as “the next few months may be very challenging” amid a record surge in Covid-19 cases across the country.
As of Friday, the US is the worst-hit country with the world’s highest number of Covid-19 cases and deaths at 11,710,084 and 252,484, according to the Johns Hopkins University.