US Treasury Secretary: Central bank to return funds totaling 455 billion dollars
US Treasury Secretary Steven Mnuchin has announced the end of some billion dollar Corona aid programs, contrary to the recommendations of the Federal Reserve. Mnuchin wrote in a letter to Fed Chairman Jerome Powell on Thursday that the measures created in the spring via the Cares Act would now expire on December 31. The central bank should return funds amounting to 455 billion dollars to Congress. The Fed immediately protested.
It would be better if the money were to continue to be used to secure the still-under-attacked economy, it said in an email. The US Chamber of Commerce also criticized the move.
Mnuchin's announcement weighed on the financial markets, S&P 500 futures initially gave way during the night. Previously, hopes of a new US Congress aid program had given Wall Street a boost. In initial reactions, experts spoke of a gap that will now open up until the assumption of office of Democratic President-elect Joe Biden on January 20. “The markets will operate for about three weeks in January without the backing they have had since spring,” said JPMorgan's Michael Feroli.
In the past few days, the Fed had spoken out in favor of continuing the programs. These are not used extensively. However, the Fed attributes a calming effect on the financial markets and investors: companies, non-profits and local authorities know that they could receive state aid if the worst came to the worst.
