Coronavirus-Response Bill Isn’t a Corporate Bailout, Says Mnuchin
U.S. Treasury Secretary Steven Mnuchin on Monday said a coronavirus-response bill he is negotiating with Senate lawmakers doesn’t amount to a corporate bailout, pushing back against Democratic criticism.
The bill would provide $425 billion for the Treasury’s Exchange Stabilization Fund, an obscure pot of money that the Treasury has used in recent days to cover losses on new lending facilities launched by the Federal Reserve.
“I’ve heard people out there refer to this as a slush fund,” Mr. Mnuchin said in an interview with Fox Business Network. “It’s not a slush fund; it’s a mechanism that we can use working with the Federal Reserve that will provide another $4 trillion of potential liquidity into the market. That’s on top of the Fed’s balance sheet.”
Mr. Mnuchin said he is meeting with Senate Minority Leader Chuck Schumer (D., N.Y.) to continue negotiations over the bill, which stalled in the Senate on Sunday due to Democratic opposition. Democrats said the measure was too generous to corporations and provided the Treasury secretary with too much discretion and too little oversight.
“We need to get this legislation passed today,” Mr. Mnuchin said.
The Fed announced Monday morning a significant expansion of its lending facilities in coordination with the Treasury, which must sign off on the programs. Three new facilities will create $300 billion in financing for corporate credit markets, as well as consumer and business credit markets, with the Treasury covering $30 billion in losses with money from the Exchange Stabilization Fund.
The Fed also said it would soon launch a Main Street Business Lending Program that will support lending to eligible small and midsize businesses.
In a statement issued after the decision, Mr. Mnuchin said the Senate bill is designed to provide more money to support Fed lending operations.
Source: Dow Jones