Treasury Secretary Steven Menuchin on Friday canceled his department’s decision to pull the plug on several Federal Reserve programs, saying there is plenty of money around to provide funding where it is needed.
“It was a very simple thing. We are following the intent of Congress,” Mnuchin told CNBC’s Jim Kramer during a “squeak on the street” interview.
After working together throughout the year through a series of lending and on-going liquidity programs, the Treasury and the Fed found themselves on Thursday, Mnuchin said, adding that a handful were established during the early days of Treasury coronoviruses Will not try to increase lending programs. Ubiquitous epidemic.
Funding for the programs is scheduled to expire at the end of the year. They cover the purchase of corporate bonds, loans to state and local governments, and the Main Street Lending Program for small and medium-sized businesses. The Fed said it wanted to expand the programs, but would now have to return unused capital to the facilities.
“It’s not a political issue. It’s very easy,” Mnuchin said.
In a letter released on Friday afternoon, Fed Chairman Jerome Powell said the central bank would comply with the request to return the unused portion of the Treasury Fund.
“We will make arrangements to return unused portions of the funds allocated for the Cars Act facilities at the end of their year,” Powell said.
Mnuchin said that up to $ 800 billion could be deployed in potential firepower if needed at exchange stabilization funds and elsewhere. However, he said that “we don’t need to buy more corporate bonds. The municipal market is working, people are able to borrow a lot of money in the markets.”
Minutes before Mnuchin’s interview, Chicago Fed President Charles Evans told CNBC that the Treasury’s move was “disappointing”.
“What shall I say. Shall I ask him to go to read the law, which is very clear, or ask him to call for a chair.” [congressional] Committee, ”replied Mnuchin.
Mnuchin stressed that his relationship with Fed Chairman Jerome Powell is positive despite disagreements.
The Fed chief “understood my view of Congress’s intent,” he said when asked about the central bank’s statement of disagreeing with the decision. “There is a very close relationship between Chairman Powell and me.”
Financial markets should also not worry. Stocks saw moderately negative openings on Wall Street, while government bond yields were as good as low.
He said, “The market should be very comfortable.
He said, “I am getting such irony now that I am getting smarter and returning money to Congress, as if I think people are questioning them.”