WASHINGTON – Senators argued Tuesday over the termination of several Federal Reserve emergency credit facilities as Congress continues to debate additional laws to stimulate coronavirus.
At a Senate Banking Committee hearing, Treasury Secretary Steven Mnuchin defended the termination of emergency credit facilities approved by the Coronavirus, Aid, Auxiliary and Economic Security Acts and the return of excess funds to the Treasury Department. Federal Reserve Chairman Jerome Powell, who appeared before the committee, called on Congress to provide additional tax breaks as the coronavirus pandemic continues to hit businesses and families.
Mnuchin's testimony was supported by Republican senators who said he was simply following the law. Democrats, on the other hand, criticized the Treasury Department for hampering the new Democratic government's ability to stabilize the economy as the pandemic progressed.
"I agree with Secretary Mnuchin on the success of the 13 (3) facilities and termination language in the CARES Act," said Mike Crapo, chairman of the R-Idaho Senate Banking Committee. "The 13 (3) facilities funded under the CARES Act were effective and served their purpose to stabilize markets, facilitate credit flow and provide liquidity."
"I find it implausible that every member of this committee believes that when you voted for the CARES bill, you authorized me to invest $ 500 billion to make long-term loans," said Treasury Secretary Steven Mnuchin ( left) The bank would have kept the programs if the Treasury Department hadn't requested their termination.
But Senator Sherrod Brown, the top Democrat on the panel, criticized the Treasury Department's request as a political ploy to hamper the new administration's ability to deal with economic difficulties when it takes office next year. President-elect Joe Biden has already announced his intention to appoint former Fed Chair Janet Yellen to replace Mnuchin in the Treasury.
"After the election, you canceled the Federal Reserve's loan programs and took away vital tools for investing in the people, communities and small businesses that make this country work," Brown said. “There is no legitimate justification for this. Either you are deliberately trying to prevent President-elect Biden and Janet Yellen from working for the people we all serve, or you are so delusional that you think that because the stock market is back on its feet all is well. "
Mnuchin said the funds allocated in the CARES bill for the Fed's facilities should be used temporarily.
"My decision not to expand these facilities was not an economic decision," said Mnuchin. “I am surprised to hear Sen. Brown use words like“ sabotage, no legitimate justification, delusion, wrongdoing. ”This is perfectly clear. The Senate gave the Treasury Secretary unprecedented authority by giving me $ 500 billion. The statute was very clear. I find it implausible that any member of that committee would believe that when you voted for the CARES bill, you authorized me to invest $ 500 billion to make long-term loans. "
Powell, on the other hand, said the Fed would have kept the emergency loan programs if the Treasury Department hadn't requested their cancellation.
"We think we would have left the facilities as backstops," said Powell. "We are not questioning the secretary's decision on the CARES Act money as that is solely his decision, but I think central banks in general would have."
Republican senators backed Mnuchin's move, arguing that Congress should pass new laws in support of coronavirus relief programs.
"I don't think we should ask Secretary Mnuchin to do the work of Congress," said Senator Thom Tillis, R-N.C. "If Congress is serious about protecting paychecks, if it is serious about stabilizing the economy, then it will be serious about getting a follow-up to the CARES bill."
The hearing came when a bipartisan group of senators introduced a stimulus bill that would allocate approximately $ 300 billion to the Small Business Administration's paycheck protection program, $ 180 billion to expand unemployment benefits for pandemics, and provisions for financial institutions and minorities in the country Community development includes depository sites.
Senator Mark Warner, D-Va., Urged Senators to review the proposal, which has not yet been endorsed by House Speaker Nancy Pelosi, R-Calif., Or Senate Majority Leader Mitch McConnell, R-Ky has been.
"It's not a long-term plan that I know Secretary Mnuchin is negotiating with Speaker Pelosi. It may not be what President-elect Biden wants to do," Warner said. "But this package, which weighs $ 908 billion, takes care of (unemployment insurance), it takes care of health, it takes care of student loan support, it takes care of small businesses, with an emphasis on these CFDIs. "