U.S. Treasury Secretary Steve Mnuchin speaks during a news conference to announce the Trump administration’s restoration of sanctions on Iran, at the U.S. State Department in Washington, September 21, 2020.
Patrick Semansky | Pool | Reuters
President-elect Joe Biden’s Treasury secretary will need Congress to approve re-use of $455 billion in funds that the Trump administration is taking back from Federal Reserve and other pandemic lending programs, the Treasury said on Monday.
Biden is expected to name former Federal Reserve chair Janet Yellen as his Treasury secretary, putting a woman in the job for the first time since the department was created in 1789.
Current Treasury Secretary Steve Mnuchin last week said he would allow some little-used coronavirus lending programs at the Federal Reserve to expire on Dec. 31 and allow Congress to spend the funds on other aid for businesses and individuals.
Biden’s transition team called the move, which restricts the new administration’s ability to backstop financial markets during a worsening pandemic, “deeply irresponsible.”
A Treasury spokesperson confirmed a Bloomberg report saying that the reclaimed money will be put into the Treasury’s General Fund, but denied that moving it out of the Exchange Stabilization Fund would put the funds off-limits.
The funds are tied to expiring Fed lending programs for mid-size businesses, municipal bond issuers and other borrowers, the spokesperson said, adding that any new use, including renewing the facilities, would require congressional approval.
Senator Ron Wyden, the top Democrat on the Senate Finance Committee, said Mnuchin’s move was “shameful” and marked a sharp contrast to his efforts to broker a large stimulus deal before U.S. President Donald Trump lost the election.
“As the economy backslides amid skyrocketing Covid-19 cases, Secretary Mnuchin is engaged in economic sabotage, and trying to tie the Biden administration’s hands,” Wyden said in a statement to Reuters.
A Treasury official said on Friday that funds covering about $25 billion in existing loans from the facilities would stay at Treasury, but any money paid back from the loans could not be used for anything else without Congressional approval.
At the end of 2025, according to the CARES Act legislation passed in March, any remaining relief funds must be transferred to the General Fund and used for budget deficit reduction.