The US Federal Reserve said Monday it has extended several pandemic emergency lending programs for three months through March 31, with approval from the Treasury Department.
The announcement came after Treasury Secretary Steven Mnuchin last week said some of the programs should be allowed to lapse as planned on December 31 — but he did approve an extension of some aimed at supporting financial markets.
The Fed protested the decision in a rare public statement, saying the programmes provided an important “backstop for our still-strained and vulnerable economy.”
Mr. Mnuchin's decision to pull back $455 billion in unused funds from the Fed, even as COVID-19 cases are spiking, drew intense criticism and accusations he was trying to sabotage President-elect Joe Biden's efforts to support the economy.
In the announcement, the central bank said that by supporting “critical short-term funding markets, these facilities are supporting market functioning and enhancing the flow of credit to the economy.”
And having the funds available if needed will “provide certainty that the facilities will continue to be available through the first quarter of 2021 to help the economy recover from the COVID-19 pandemic.”
The programmes include the Commercial Paper Funding Facility and the Primary Dealer Credit Facility, through which the Fed buys corporate debt and provides cash to the companies.
However, the extension does not include the Main Street Lending Program that helps small- and medium-sized businesses that have been hard hit by the pandemic, due to shutdowns, restrictions and changes in consumer behaviour.
