Finance Minister Stephen Mnuchin denied on Friday that his decision to suspend several emergency reserve programs on the Federal Reserve was aimed at crippling the upcoming Biden administration.
On Thursday, Mnuchin unexpectedly announced that he was terminating several joint loan programs and asked the Fed to return the $ 450 billion to the Treasury so that it could be returned to Congress. According to post-financial crisis reform, the Fed now needs the permission of the finance minister before it can set up emergency loan programs.
Read: Mnuchin pulls Fed’s loan programs
Some analysts speculated during the night that withdrawing that funding would limit the Biden administration’s ability to quickly adjust programs as it saw fit.
“We are not trying to stop anything. We follow the law, “Mnuchin told CNBC.
“I’m cautious and I’m returning the money to Congress properly,” he said. “This is not a political decision.”
Mnuchin said his decision released $ 500 billion for Congress to use “it won’t cost taxpayers any more money.”
Mnuchin portrayed his decision in a populist way.
“The people who really need support right now are not rich corporations, but small businesses,” Mnuchin said.
“We don’t need to buy more corporate bonds,” he added.
Earlier, in a separate interview, Chicago Fed President Charles Evans said lending programs play an important backup role for financial markets, which could be important in the future, and the decision to end them is disappointing.
Asked about his response to Evans, the finance minister said central bankers never like to lose any of their instruments.
“Markets need to be very comfortable, we have enough capacity” without these funds in the event of a future disorder, he said.
And the financial conditions are “in excellent shape,” he added.
Shares opened lower on Friday, with the S&P 500 SPX index,
a decrease of 0.08% in morning trading.