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A dispute has broken out between the outgoing US government and the Fed over billions in aid in the crown crisis: US Secretary of the Treasury Steven Mnuchin wants to end certain programs of help against the Fed’s recommendations. In a letter to central bank director Jerome Powell on Thursday night, Mnuchin called for the phasing out of some of the emergency crown programs launched by the Fed.
Specifically, it is about half a trillion dollars. Mnuchin wants to use the released funds, which were made available by the Finance Ministry, for other purposes in the crown crisis, for example, for another economic stimulus package. Negotiations have stalled in the US Parliament for months.
The Fed responded immediately to Mnuchin’s request. She advocates letting all the emergency programs launched in the crown crisis continue for now.
These programs deal with loans to small and medium-sized companies or the purchase of municipal securities to support cities and municipalities in crisis. For some time, the Fed had to defend itself from the fact that some of the programs were hardly used. The Fed, on the other hand, sees this as a success, as the programs have helped defuse the situation.
Public dispute instead of a common crisis policy
The Ministry of Finance had supported the programs with significant financial resources. This happened mostly because otherwise the Fed would have been prohibited from taking any action, at least in some areas.
Public debates between the Treasury Department and the Federal Reserve are extremely rare in the United States. Usually, especially in times of crisis, the two institutions work closely together to prevent damage to the economy.
