Mnuchin's Folly...
Early this morning on CNBC, Mr. Mnuchin misleadingly spoke as if he were simply “following the intent of the law” by yanking this monetary aid away and he put the onus on “Congress to re-appropriate these funds,” even though widespread reporting suggests his boss, President Trump, has no interest in new deals. Tellingly, a couple of programs that help Wall Street were allowed to live on “in an abundance of caution,” as the secretary’s letter claimed.
Secretary Mnuchin’s move comes just as President-elect Joe Biden is preparing to name his own Treasury secretary, and it fits a growing pattern of Mr. Trump’s team doing everything it can to undermine and kneecap the incoming administration’s ability to crisis manage.
We have a long way to go until Inauguration Day, yet the Fed can begin to prepare itself now to act as more than a backstop. Based on the prospects for action from Congress, our states and local communities will need it.
David Dayen in his newsletter with a different take on Mnuchin's work...
Rhetorically, however, what Mnuchin’s saying is completely on point, and should be taken up by Democratic leaders. Even the Republican Treasury Secretary is now admitting that Wall Street has had enough support, and it’s time to give the same support to the general public in this critical moment, as a bridge to the vaccine’s eradication of the virus.
To a lesser extent, the Main Street Lending Program could support small business. It’s definitely notable that Mnuchin wants to end the programs that could help public employees and small businesses, now that the threat to investors has subsided.
My problem is that I don’t believe the Fed would actually do anything of value with the authority granted it.
It’s been eight months so far; two MLF loans have been made, despite widespread pressure from Democrats. The theory is that Treasury has been the roadblock all along to lending freely or using the money cannon in any unorthodox way. However, the Fed has plenty of authority to aid state and local governments outside of the money cannon, without Treasury having veto power over it.