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Mnuchin, McConnell want to tap unused Fed funds for stimulus

By Erik Wasson and Saleha Mohsin, Bloomberg News on

Published in News & Features

WASHINGTON — Treasury Secretary Steven Mnuchin bid to revive stalled stimulus talks with congressional Democrats by proposing the use of untapped Federal Reserve relief funds as part of a new package of aid.

But Mnuchin's plan to shutter a number of the Fed's emergency-lending facilities ran into immediate opposition from Democrats. President-elect Joe Biden's transition team slammed it as "deeply irresponsible," and House Speaker Nancy Pelosi accused the Treasury secretary of trying to hobble the incoming administration.

Mnuchin and Senate Majority Leader Mitch McConnell discussed the strategy Friday, in the first sign in weeks of possible movement on stimulus in the waning days of the Trump administration. Democrats and Republicans have to date had widely different views on the amount of fresh appropriations needed for COVID-19 relief.

McConnell backed Mnuchin's proposal to use $580 billion that was allocated for Fed loan guarantees, small business help and other coronavirus-relief programs that remains unspent.

"Congress should repurpose this money toward the kinds of urgent, important and targeted relief measures that Republicans have been trying to pass for months, but which Democrats have repeatedly blocked with all-or-nothing demands," McConnell said in a statement.

For their part, Democratic leaders reiterated in a statement Friday their call for a comprehensive stimulus package that offers aid to unemployed, small businesses and state and local authorities and boosts funding for health care and fighting COVID-19 before the new administration takes office Jan. 20.


Biden, Vice President-elect Kamala Harris, Pelosi and Senate Democratic leader Chuck Schumer issued the joint statement after meeting on Friday. Biden in his first 100 days plans "aggressive action" on fighting COVID-19 along with "providing resources to small businesses, families, schools, and state and local governments to power our economic recovery, and investing in the middle class to build back better," according to the statement.

Meantime, the Fed said Friday it would comply with the Treasury Department's request to return the unused funds that were meant to backstop five emergency lending programs that are expiring.

Biden transition spokeswoman Kate Bedingfield said ending the programs would remove a support for small businesses just as the virus is surging across the country and the economy continues to reel.

"We should be reinforcing the government's ability to respond and support the economy — not undermining it," Bedingfield said in a statement. "This follows a disturbing pattern of this administration putting petty grievances ahead of the health and safety of the American people."


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