Charles Evans, president of the Federal Reserve Board of Chicago, has expressed disappointment with the Treasury’s decision to end several lending programs undertaken during the coronavirus pandemic.
The day after Treasury Secretary Steven Mnuchin said the program wouldn’t continue past the year-end deadline, Evans told CNBC that the facility provided important functionality.
“I think our 13 (3) facilities have been very helpful. They act as a backstop when the market gets into more difficult situations,” he said in an interview with “Squawk Box.” I told CNBC’s Steve Riesman. “It’s a shame because I think the role of the backstop may be important for quite some time.”
Evans’s comment referred to the Federal Reserve Act section where the emergency program was created.
Facilities in question include two Fed purchases of corporate bonds, one focused on lending to state and local governments, and a main street lending program for small businesses.
The Treasury has provided the program with collateral that can be used to harness its total lending capacity. The Federal Reserve Board said its presence helped calm the market during the March turmoil and has been a support mechanism ever since, but most facilities were used sparingly.
In a statement in response to a letter sent by Mnuchin to Federal Reserve Chairman Jerome Powell, the central bank “continues to play an important role as a backstop for a tense and fragile economy.” He said he wanted to continue.
Evans said he was worried that parts of the economy would need more help as the virus continued to spread rapidly throughout the country.
Fed Evans disappointed with Mnuchin’s move to stop funding
Source link Fed Evans disappointed with Mnuchin’s move to stop funding