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November 23, 2020

Treasury Takes Step To End Pandemic Loan Program

In a surprise move on November 19, U.S. Treasury Secretary Mnuchin asked the Federal Reserve to return to the Treasury unused COVID-related emergency funds. Returning the funds would allow the U.S. Congress to reallocate them, but as a result, on December 31, 2020 several Fed programs that have backed corporate credit and municipal-borrowing markets and that have provided loans to small and midsize businesses and nonprofits during the coronavirus pandemic, would end.

The Federal Reserve objected to the request, however, setting up a potentially very public and impactful dispute.

A significant portion of the $455 billion that Secretary Mnuchin has asked the Fed to return is from the under-utilized Main Street Lending Program. According to CNBC, through early November, the MSLP issued just shy of $4 billion in loans, compared to its $600 billion capacity.