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Legacy on the Line, Mnuchin Gambles in ending Fed programs

The programs could still be restarted next year – but on a smaller scale. Mr Mnuchin’s successor could offer the Fed perhaps $ 50 billion from an old pot of Treasury money. With less funding to support them, programs would likely have to take less risk, which could hamper efforts to make programs more generous.

Mr Mnuchin said last week that he told Janet L. Yellen, Mr Biden’s candidate for Treasury secretary, that his actions were not politically motivated and that he was following the law. Recounting the conversation, which took place as part of the transition process, Mr Mnuchin said Ms Yellen did not offer her own interpretation.

But his stance that the programs must cease to operate at the end of the year only became public after Mr Biden won the 2020 election, giving the move a political appearance. As late as early November, senior officials in the Treasury Department were debating whether to extend the programs and gave no indication that they believe Congress had predicted efforts would stop in December while concluding an agreement in March.

On November 19, Mr Mnuchin bluntly said he had always believed the programs could not continue beyond the end of the year using the money allocated and demanded the Fed to return the unused investments. . The Fed, which agreed to return the money, said in a statement that it “would prefer that the full suite” of programs “continue to play its important role in supporting our still strained and vulnerable economy.”

New York Democrat Senator Chuck Schumer, who drafted the law in his office with Mr Mnuchin, believes it was absolutely not the intention of Congress for the installations to end in December, his spokesperson said . They were meant to exist during the crisis, which is clearly not over, he added.

Critics of Mr Mnuchin argue he gave in to the wishes of Senate Republicans while acting vindictively to leave the Biden administration with a weaker arsenal to fight the crisis.

“I think that’s part of the nastiness, politics and politics of brass knuckles,” said Neil M. Barofsky, former special inspector general of the Troubled Asset Relief Program.

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