Nov 25, 2020 - Economy & Business

Mnuchin's plan to shift unspent Fed funds

Tug of war over federal reserve logo
Illustration: Aïda Amer/Axios

A move by Treasury Secretary Steven Mnuchin could handcuff his likely successor Janet Yellen's ability to immediately restart Fed economic programs.

Driving the news: Mnuchin is planning to shift $455 billion in unspent CARES Act funds into a special account that would require Congress' permission to access, Bloomberg reports.

  • It's the latest development in the battle over the Fed's emergency lending programs that Mnuchin said would sunset at year-end.

Why it matters: Assuming no deal before the inauguration, no one knows how long it will take to push through another stimulus when Joe Biden takes office. In theory, these funds could have backed Fed economic support programs while Congress hashes out the next aid package.

  • Now it looks like using these funds comes with the additional hurdle of congressional signoff.

The big question: Whether Mnuchin can do this.

  • Bharat Ramamurti, who's part of the watchdog panel overseeing CARES Act funds, tweeted Mnuchin's plans were "illegal and can be reversed next year."
  • He's not the only one who believes transferring the money to this fund now violates terms laid out in the CARES Act.
  • Treasury maintains Mnuchin's move is legal, Bloomberg notes.
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