WASHINGTON – Treasury Secretary Steven Mnuchin was reprimanded Thursday by a congressional monitoring group over his handling of the economic relief effort, with members questioning whether he was politicizing the management of hundreds of billions of dollars in stimulus funds .
Mr Mnuchin, at times defiant and defensive of his efforts, insisted he was simply following the law and the intention of Congress in his decision-making. But the scrutiny could further complicate his role in trying to secure another pandemic relief package with lawmakers, who have criticized the secretary’s handling of anti-virus funds.
Republicans and Democrats on the watch panel raised the question of whether Mr Mnuchin granted a $ 700 million loan to YRC Worldwide, a struggling trucking company, because of its ties to White House officials . And Democrats continued to press Mr. Mnuchin on whether he was ending several Federal Reserve emergency loan programs to limit the new Biden administration.
“It was a political decision – a move meant to cripple the incoming administration even as Covid deaths increase and economic recovery slows,” Bharat Ramamurti, appointed member of the Congressional Oversight Committee, said during Thursday’s hearing. “Let me put it this way: does anyone think the Treasury would have ended these programs if Donald Trump had been re-elected?”
The focal point of the hearing was supposed to be the $ 17 billion allocated to the treasury to support businesses deemed essential to national security. The loan to YRC, which was in financial difficulty before the pandemic, has been a matter of concern for the committee since the Treasury Department approved it in June. Republicans on the committee, Sen. Patrick J. Toomey of Pennsylvania and Representative French Hill of Arkansas, both raised questions about why the company deserved a justified loan on the grounds that the company was essential. to national security.
“It’s been hanging by a thread since the global financial crisis,” said Mr. Hill.
Mr Toomey said that YRC, which had been hired by the Defense Department to provide meal kits, protective gear and other supplies to military bases, appeared to be nearly insolvent and asked whether to give it any assistance. money was a prudent use of taxpayer funds.
Mr Mnuchin, a former banker, agreed he would not have taken out the loan if he was still in the private sector, but said the gave the ministry the ability to help prevent financial problems and job losses in companies deemed essential to national security. He defended the loan, saying it was given to avoid job losses and that because the economy recovers, the government would end up profiting from the deal.
“There was a huge risk to the Defense Ministry and a huge risk to the number of jobs,” Mnuchin said.
But Mr Mnuchin was pressed to find out whether political patronage was at play and whether YRC got such a large loan so quickly because its biggest funder is Apollo Global Management, a private equity firm linked to the House. White. Apollo, who spent nearly $ 1 million lobbying lawmakers this year for coronavirus relief funds, loaned $ 184 million in 2017 to the Kushner Companies, a real estate company run by Jared’s family Kushner, son-in-law and senior adviser to Mr. Trump. The loan was used to refinance a mortgage on a Chicago skyscraper.
Mr Mnuchin said Mr Kushner had no contribution on the loan, but said lawmakers on both sides urged him to find a way to help YRC, which he said declared bankruptcy and made redundant thousands of workers without the government. support.
A new report from the Government Accountability Office said that the YRC loan was the only one of 11 national guarantee loans granted by the Treasury Department to have been “rushed” even though other companies faced similar financial circumstances.
Defense Department officials, who certified the YRC as essential to national security, refused to attend the hearing, prompting criticism from Mr Toomey. The Defense Department, which has been stuck for weeks in providing the committee with a written response to its questions about the loan, will hold a separate teleconference with the committee on the loan program, but Mr Toomey said the agency resists transcription of that. public teleconference.
Mr Mnuchin also parried more criticism over his decision to end five Fed lending programs. He again insisted on Thursday that he was following the intention of the law by terminating year-end programs and clawing back billions from the Fed. This position is at odds with what many lawyers and Congressional Democrats say is really necessary.
On November 19, Mr Mnuchin said he believed from the start that the programs could not continue beyond the end of the year and called on the Federal Reserve to return the unused investments.
Mr Toomey had put forward the legal rationale that Mr Mnuchin ultimately cited for terminating the programs – the idea that Congress had wanted them to end at the end of the year – before Mr Mnuchin did. publicly adopts. It did so at a time when a senior Treasury official told the New York Times that the department was still considering expanding some of the programs.
Mr. Toomey’s recollection of the intention of Congress contrasts with that of New York Democrat Senator Chuck Schumer, who also helped draft the law. Mr Schumer believes it was absolutely not Congress’ intention for the installations to end in December, his spokesman said, adding that they were intended to survive during the crisis, which is clearly not over. .
“We have people who think these facilities should be used as a way to subsidize senior borrowers – perhaps municipalities that have been irresponsible,” Toomey said Thursday. “That’s absolutely not what these programs were for – they were about restoring a working market, and that’s why the law called for them to end. And that’s why the secretary did exactly the right thing in terminating them.
Mr Toomey added that it “would be scandalous” for a future Secretary of the Treasury to restart them – which Democratic Senators have suggested that Janet L. Yellen, Mr Biden’s choice for Treasury Secretary, should do if and when it is confirmed. He suggested a legal battle would ensue if Ms Yellen seeks to restart programs without congressional approval.
“We would be stuck in litigation for who knows how long if someone were to go down this route,” Toomey said.