Yellen would need Congress to approve the use of restrained Fed loan funds, Treasury says

WASHINGTON (Reuters) – Treasury Secretary-elect Joe Biden will need Congress to approve the reuse of $ 455 billion in funds that the Trump government is taking back from the Federal Reserve and other epidemic lending programs, the Treasury said Monday.

Biden is expected to appoint Janet Yellen, former President of the Federal Reserve, as his Minister of Finance, who, for the first time since the woman was created in 1789, will hire a woman.

Current Finance Minister Steve Mnuchin said last week that he would allow some of the Federal Reserve’s little-used coronavirus lending programs to expire on December 31 and allow Congress to spend the funds on other grants to help businesses and individuals. .

Biden’s interim team called the move “deeply irresponsible” a limitation on the new administration’s ability to stop financial markets during a worsening pandemic.

A Treasury spokesman confirmed Bloomberg’s report that the money back would be placed in the Treasury’s general fund, but denied that placing it out of the stock market stabilization fund would impose restrictions on the funds.

The funds are tied to expiring Fed lending programs for midsize businesses, municipal bond issuers and other borrowers, the spokesman said, adding that any new use, including the renewal of facilities, would require congressional approval.

Senator Ron Wyden, a senior Democrat on the Senate Finance Committee, said Mnuchin’s move was “shameful” and was in stark contrast to an effort to mediate a big stimulus deal before US President Donald Trump lost the election.

“As the economy declines in COVID-19 skies, Secretary Mnuchin is engaging in economic sabotage and trying to tie the hands of the Biden administration,” Wyden said in a statement to Reuters.

A Treasury official said on Friday that some of the $ 25 billion in existing loans from the facilities will remain with the Treasury, but the money repaid from the loans can not be used for anything else without congressional approval.

At the end of 2025, according to the legislation adopted by the CARES Act in March, the remaining aid funds should be transferred to the General Fund and used to reduce the budget deficit.

Report by Heather Timmons and David Lawder; Edited by Cynthia Osterman and Bill Berkrot