Treasury Secretary Steven Munuchi on Friday rejected his department’s decision to pull the plug on several Federal Reserve programs, saying there was still plenty of money left to fund where needed.
“It was a very simple matter. We are pursuing the purpose of Congress,” Amnuchin told CNBC’s Jim Kramer during an interview in “Squ Squ the No Street.”
After working together over the years in a series of lending and market liquidity programs, after the Treasury and the Fed found themselves in a quandary on Thursday, Munchin said the Treasury would not seek an increase in the handful of lending programs launched in the early days of the coronavirus. Nationwide epidemic.
Funding for the programs is due to expire at the end of the year. They cover major corporate financing programs for purchasing corporate bonds, loans to state and local governments, and small and medium-sized enterprises. The Fed said it wants to expand programs, but will now have to return unused capital committed to facilities.
“This is not a political issue. This is very simple,” Munuchi said.
Munuchi said the potential firepower is as high as 800 800 billion which could be deployed through the Exchange Stabilization Fund and elsewhere where needed. However, he added, “We don’t need to buy more corporate bonds. The municipal market is working, people are able to borrow a lot of money in the markets.”
Minutes before Munuchin’s interview, Chicago Fed President Charles Evans spoke to CNBC and called the Treasury move “disappointing.”
“What would I say if I told him to go read the law, which is very clear, or call him to the chair?” [congressional] Committee, ”Mnuchin replied.
Munuchi insisted that his relationship with Fed Chairman Jerome Powell remains positive despite disagreements.
The Fed head “understands my view on the purpose of Congress,” he said when asked about the central bank’s statement disagreeing with his decision. “Chairman Powell and I have a very close relationship.”
Financial markets should also not be a concern, Muchin added. On Government Street, stocks were seen to be negative while government bond yields were also low.
“Markets should be so comfortable that we have plenty of potential left,” he said.
He added, “I find this kind of ridiculous now that I’m sensible and returning money to Congress as I believe people are questioning it.”
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