Mnuchins Fed funding clawback will not hamstring new administration

Secy Mnuchin asks Fed to return $455B of COVID relief funds

The programs - that were set to expire at the end of the year - include the Fed's corporate credit facilities, municipal lending facility and the Main Street Lending program for small and mid-size businesses.

It also fueled speculation by some commentators that the Trump administration was attempting to constrain President-elect Joe Biden's ability to respond to the economic fallout from the pandemic as Covid-19 cases surge in the U.S. He said Friday that Congress could make better use of the money by re-allocating it in another direction to support grants to small businesses and extended unemployment assistance. "It's very clear in the law".

The Fed issued a rare public rebuke in a statement, saying that it "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 US Chamber of Commerce called for a reconsideration of Mr Mnuchin's decision.

Among the initiatives that will no longer be able to extend new credit are two facilities that allowed the Fed to buy corporate bonds for the first time. Policy makers have acknowledged that is partly because early iterations of the tools were too narrow and created to limit credit risk. Weinberg said. "These are the lifeboats for the economy, these are the places for companies to go when there is no place else to go, whether they are small business or medium-sized businesses, not the big ones that can go to the capital markets, but the little ones".

"We're not trying to hinder anything", Mnuchin said in a CNBC interview.

McCarthy on Thursday complained to reporters that small businesses across the country are struggling, and facing further lock downs "with no help from Washington".

Negotiations between the Trump administration, Senate Republicans and House Democrats over the terms of additional economic relief have been deadlocked for months.

Trump options narrow as MI backs Biden win
She pointed out that some 70 Democratic lawmakers had boycotted his inauguration. Biden is set to take office on January 20 as the 46th United States president.

The secretary on Thursday sent Powell a letter demanding the return of money the government provides the central bank so it can lend to certain markets in times of stress.

Mr Mnuchin said that the objective of his announcement was not to pit the Treasury against the Fed, and that he was merely carrying out the law prescribed by the Cares Act.

The major news on the final day of the week was US Treasury Secretary Steven Mnuchin's decision not to extend numerous Fed's government-funded emergency lending programmes beyond 31 December, a decision which the Fed immediately and publicly expressed their disagreement with.

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.

"Congress should repurpose this money toward the kinds of urgent, important, and targeted relief measures that Republicans have been trying to pass for months", McConnell said in a statement. "They weren't in the room, that's not their job", he said.

Pelosi and Senate Democratic leader Chuck Schumer this week wrote to McConnell asking him to return to the negotiating table on a stimulus bill, but so far have given no indication they're willing to lower their demands for a $2.4 trillion bill.

But Mnuchin denied it was meant to handicap his successor and said his department would work closely with the incoming administration "if things get certified" - a reference to President Donald Trump's legal challenges to election results.

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