Sen. Chuck Grassley is urging the U.S. Treasury to be more aggressive in pushing coronavirus relief funds into the economy to offset the impact of pandemic.
Treasury Secretary Steven Mnuchin said this week that the $454 billion federal lending programs enacted in March to protect the economy were working as intended. He went on to say he doesn’t anticipate easing access to those loan programs because “there’s not much more we can do.”
Instead, the treasury secretary suggested repurposing the $259 billion remaining in those programs for other spending. He attributed low participation in some of the programs to the need of would-be borrowers for grants, rather than loans, that would require additional congressional funding.
However, Grassley, chairman of the Senate Finance Committee, said Mnuchin “is not moving aggressively enough to encourage the (Federal Reserve) to make greater use of this.”
The argument for the funds is that every $1 loaned would incentivize $10 of economic activity — a $4.5 trillion boost to the economy, Grassley said.
However, he’s seen hesitancy to use the funds that were meant to back up lending by the Federal Reserve “the same way the Fed backs up banks.”
“I think that there was some discouragement to the Fed from Mnuchin in regard to that,” the Iowa Republican added. “And so it hasn’t worked as effectively as it should, but I think there’s still a need for it.”
Grassley also sees a need for another round of coronavirus relief because the Fed already has interest rates near zero and has told Congress it plans to keep them there for three or four years.
“So there’s not a whole lot of gas that the Fed can throw on the fire to keep this turned-around economy going,” he said.
Grassley expressed reluctance to increase pandemic aid for state governments, which he said have not made full use of the programs in place. A $500 billion loan program for state and local governments has resulted in only two loans.
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