Letter to Treasury Secretary Mnuchin, November 20, 2020 — Federal Reserve Chair Jerome H. Powell
Summary
A letter dated November 20, 2020 from Federal Reserve Chair Jerome H. Powell to Secretary of the Treasury Steven Mnuchin on the CARES Act emergency lending facilities. The letter states that the facilities supported state and local governments, small and medium-sized businesses and large employers. It notes the Secretary's position that his authority under the CARES Act does not permit the facilities to make new loans or purchase new assets after December 31, 2020, and his request to return Treasury's excess capital. The letter says the Federal Reserve will work out arrangements for returning the unused funds in connection with the facilities' year-end termination. It adds that non-CARES Act funds in the Exchange Stabilization Fund remain available, to the extent permitted by law, to capitalize lending facilities.
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Full text
November 20, 2020
Mr. Steven Mnuchin
Secretary of the Treasury
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Dear Mr. Secretary,
Like you, I am pleased with all that we have accomplished together this year. We
rapidly put in place emergency lending facilities to support state and local governments,
small and medium-sized businesses, and large employers. These were novel and complex
programs that required us to work productively together. Our efforts helped to prevent
severe disruptions in the financial system and unlocked trillions of dollars of private
lending to households, businesses, and municipalities at a moment when the economy
needed it most.
The CARES Act assigns the Treasury Secretary sole authority to make certain
investments in Federal Reserve emergency lending facilities, subject to limits specified in
the statute. You have indicated that the limits on your authority do not permit the CARES
Act facilities to make new loans or purchase new assets after December 31, 2020, and you
have requested that we return Treasury’s excess capital in the CARES Act facilities. We
will work out arrangements with you for returning the unused portions of the funds
allocated to the CARES Act facilities in connection with their year-end termination.
As you noted in your letter, non-CARES Act funds remain in the Exchange
Stabilization Fund and are, as always, available, to the extent permitted by law, to capitalize
any Federal Reserve lending facilities that are needed to maintain financial stability and
support the economy.
Sincerely,
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- www.federalreserve.gov