Mnuchin to put $455B in COVID-19 relief funds beyond successor’s reach

Treasury Secretary Steven Mnuchin signaled that he will move $455 billion in COVID-19 relief from the Federal Reserve back into the Treasury’s General Fund, a move that would make it harder for his successor to access the emergency funding.

Mnuchin said last week that he was shuttering a handful of the Fed’s emergency lending facilities, a move the central bank opposed in a rare critical statement. Those facilities, though little used during the pandemic, were seen as confidence boosters for capital markets.

The amount to be returned by Mnuchin was part of a $500 billion allocation in the $2.2 trillion CARES Act that President Trump signed into law in late March.

Mnuchin at the time requested the Fed return the funding, which Congress appropriated to cover potential pandemic-related losses, saying the CARES Act set a legal deadline for the facilities to expire by year’s end.

Putting the cash back into the general fund would make it harder for former Fed chair Janet Yellen, President-elect Joe Biden’s reported pick to lead the Treasury Department next year, to deploy the funds, and may require another act of Congress to do so.

Bharat Ramamurti, a former adviser to Sen. Elizabeth Warren (D-Mass.) who now serves as a member of the congressional committee appointed to oversee the funds, called Mnuchin’s move “illegal.”

“This is Treasury’s latest ham-handed effort to undermine the Biden Administration,” he said on Twitter.

Neither the Treasury Department nor the Biden transition team immediately responded to a request for comment.

Republicans on the Senate Banking Committee applauded Mnuchin, saying he was faithfully following the intent and letter of the law.

“Congress’s intent was clear: these facilities were to be temporary, to provide liquidity, and to cease operations no later than the end of 2020,” GOP lawmakers said in a letter spearheaded Committee Chairman Mike Crapo (Idaho) and Sen. Pat Toomey (Pa.).

“With liquidity restored, we strongly support Treasury Secretary Mnuchin’s decision to close these facilities by year-end, as Congress intended and the law requires, and the Federal Reserve’s decision to return unused CARES Act funds to Treasury,” they added.

The GOP senators said Congress could take action to “revive” the facilities if the need arose. But Congress has struggled to pass extensions for key provisions of the CARES Act that expired July 31, and congressional leaders have remained deadlocked over a new coronavirus relief bill for months.

Updated at 3:42 p.m.