Mnuchin seeks to end several Federal Reserve emergency lending programs
Department and the Federal Reserve that could leave businesses in the lurch. Now that we're entering a new round of coronavirus restrictions, enclosures Treasury Secretary Steve Mnuchin sent a letter yesterday asking the Fed to return unspent money Congress had allocated for emergency lending programs in the first relief bill. Let's bring in Allie Velshi, MSNBC anchor and economics correspondent for more Hey, Allie. Hey, Tanya. First of all, how much money are we talking about? What was the fed using it for? So this is a interesting story. I'm not even sure why this is happening right now, But it's a lot of money. It's $455 billion in what Manu Shin calls unused funding Now, by getting this money back from the Fed, it would end the Feds Emergency lending program. Which involves loans to state and local governments. Remember they've had cutbacks because of covert and to mid size businesses all the way through the main street business lending program. This money was put out in the cares Act, which is the first Bill that went out. It includes $195 billion that the Fed had already committed to specific programs. But we're talking about $455 billion, almost half a trillion dollars. Yeah. Munitions request sparked rare criticism from Fed chair Jerome Powell, who said the central bank needs this money as an important safety net. What was munitions reasoning? Well, he says that Congress intended for these funds to expire on December 31st. Now remember when we first did this cares act, not a lot of people thought we'd still be talking about this at this level. Bye bye November. That is the deadline that the act said, And he said that the feds intervention has already in his words achieved its objective. Part of the problem is he's using markets as a gauge for this, he said. Markets have responded positively, and banks have continued lending. The problem is a lot of these main street businesses that are suffering are not reflected in the stock market at all. S O Manoogian, saying We don't need the money anymore. Give it back to the federal government again as an outgoing Treasury secretary with an outgoing administration. It's not clear to me why they're doing this right now. But it has created an unusual battle between the Fed and the Treasury. Okay to gain a little bit more understanding. Republican lawmakers are arguing that fed programs where those fed programs were meant to be temporary, But the accountant economy, as we know is floundering again is talks on this new relief package or stalled. What does removing those programs actually mean for the long term recovery and the Fed's role? Well, one economist likened it to taking away the lifeboats of the Titanic. His point was, you know, when the boat left the dock, nobody needed the life the life boats, but when you needed them, and they weren't there, that would be a problem. It's not easy for the Fed to get this money. It has to be done by an act of Congress. As we know they sent it has already left for the Thanksgiving holiday. We're going to be in a lame duck session. And things are getting worse out there with covert the number. Infections are increasing. The number of deaths are increasing closures air coming again. So the sense is that if you take this flexibility away from the Federal Reserve, and things get really bad, a new president, probably Joe Biden is going to have to start negotiations again. And it could be months before you get it out there again. So why don't you leave the money with the Fed? If in case it's necessary. Okay, 30 seconds. If the Fed does give up the money, could it be used by Congress for the next relief package? It would have to be reallocate ID. So Joe Biden would have to start new negotiations with Congress. He would probably get that done with the house. But again, depending on what happens in the Senate, which we won't know who controls the Senate until the Georgia run offs in January. 5th. This could be a protracted battle again to get more money to businesses. That's MSNBC anchor and economics correspondent Ali Velshi has always thank you. Okay?