Fed’s Evans disappointed by Mnuchin’s move to stop some funding

Chicago Federal Reserve Chairman Charles Evans expressed disappointment Friday in the Treasury Department’s decision to end several lending programs implemented during the coronary virus epidemic.

Speaking a day after Treasury Secretary Steven Menuchin said the program would not continue its deadline, Evans told CNBC that the facilities provide an important function.

“I think our 13 (3) facilities have been very helpful. When they find themselves in a more challenging position, they say a backstop role,” he tells CNBC’s Steve Lysman during a “Squawks Box” interview. Let’s play. “” I think the backstop role may be important for some time, so it’s disappointing. “

Evans’ comments referred to the section of the Federal Reserve Act under which emergency programs were created.

Facilities under consideration include two in which the Fed purchased corporate bonds, another focused on lending to state and local governments, as well as the Main Street Lending Program to small and medium-sized businesses.

The Treasury funded the programs with collateral that could be used to take advantage of the total borrowing capacity. Most facilities were used only with restraint, although Fed officials have said their existence helped calm markets during the March unrest and has been a support mechanism ever since.

In a statement in response to Menuchin, a letter sent to Fed Bank chairman Jerome Powell, the central bank said it wants the program to continue as they “play an important role for our still-strained and weak economy.”

Evans said he worries that since the virus is spreading rapidly throughout the country, parts of the economy will need more support.

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