Wednesday, November 6

U.S.Treasury Looks to End Some COVID-19 Related Lending Relief Programs

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Nov. 20, 2020–Indicating confidence that the U.S. economy has weathered the worst of the COVID-19 shock, the U.S. Treasury is planning to allow five emergency lending facilities to expire at the end of 2020.

Private Banks Are ‘Capable of Lending

Treasury Secretary Steven Mnuchin said some lending-relief programs enacted in the wake of the COVID-19 pandemic should continue while others are no longer needed.

In a letter to the Federal Reserve, Mnuchin said that the emergency lending facilities the government provided in 2020 have “clearly achieved their objective” and that banks are now capable of meeting the borrowing needs of corporate, municipal and nonprofit clients.

Congress approved the programs in the CARES Act last March to mitigate the economic impact of the global pandemic. They allowed the government to pump hundreds of billions of dollars into the economy.

Federal Reserve Says Economy ‘Still Strained’

In response, the US central bank said it prefers keep “the full suite of emergency facilities established during the coronavirus pandemic” as “a backstop for our still-strained and vulnerable economy,”

Federal Reserve Board Chairman Jerome Powell recently warned that the pandemic still poses a significant threat to the US economy. He raised concerns about debt among small businesses and service-sector jobs that won’t return once they are lost.

What’s In and What’s Out

Treasury asked the Fed to return $455 billion in unused funds for the following programs, which expire Dec. 31, 2020:

  • Primary Market Corporate Credit Facility;
  • Secondary Market Corporate Credit Facility;
  • Municipal Liquidity Facility;
  • Main Street Lending Program;
  • Term Asset-Backed Securities Loan Facility.

Meanwhile, the Treasury secretary asked for a 90-day extension of the following programs:

  • Commercial Paper Funding Facility for liquidity to short-term markets;
  • the Primary Dealer Credit Facility aimed at supporting lending to households and businesses;
  • the Money Market Liquidity Facility;
  • and the Paycheck Protection Program Liquidity Facility for small businesses.
U.S.Treasury Looks to End Some COVID-19 Related Lending Relief Programs, Global Economic ReportCopyright secured by Digiprove © 2020 Patti Mohr
economic recovery, U.S.Treasury Looks to End Some COVID-19 Related Lending Relief Programs, Global Economic Report

Patti Mohr

Patti Mohr is a U.S.-based journalist. She writes about global diplomacy, economics, and infringements on individual freedom. Patti is the founder of the Global Economic Report. Her goal is to elevate journalistic principles and share the pursuit of truth in concert with others.

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