The Untold Story of Mnuchin’s Demand for the Fed to Shut Down Emergency Lending Programs

The four programs directed at helping Wall Street were the only programs that Mnuchin instructed the Fed to keep alive past December 31, 2020. For three of them, the transaction data is still being kept secret.

By Pam Martens and Russ Martens of Wall Street on Parade.

Fourteen days before U.S. Treasury Secretary Steve Mnuchin released a letter to Federal Reserve Chair Jerome Powell, demanding the return of taxpayers’ money and the end to specific Fed emergency programs by the end of the year, four Senate Democrats had written to Mnuchin and Powell asking them to extend those very same emergency programs.

The Senate Democrats who authored the letter were Senators Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, Mark Warner of Virginia and Chuck Schumer of New York. The letter explained that “As of September, 3.8 million workers suffered permanent job losses, with 2.4 million considered long-term unemployed. Moreover, according to an analysis from Moody’s, without more federal support, another 3 million teachers, nurses, emergency responders, firefighters, and others from around the country will lose their jobs in the next two years.”

The Senators outlined sensible plans for both extending and modifying the Fed’s Main Street Lending Program and the Municipal Liquidity Facility. Exactly two weeks later, on November 19, Mnuchin sent his own letter to Powell telling him to kill those exact programs by the end of the year, along with the Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility (TALF).

See the full text of the letter here.

The four programs directed at helping Wall Street were the only programs that Mnuchin instructed the Fed to keep alive past December 31, 2020. Those programs are the Primary Dealer Credit Facility, which sluiced tens of billions of dollars to the trading houses on Wall Street that are owned by the big Wall Street banks; the Commercial Paper Funding Facility; the Money Market Mutual Fund Liquidity Facility; and the Paycheck Protection Program Liquidity Facility, which reimburses certain banks for loans they had provided under the Small Business Administration’s PPP program. Citigroup, the recipient of the largest bailout in history during the 2007 to 2010 financial crisis, has inexplicably received over $3 billion from that Fed program this year. (See Citigroup Has Made a Sap of the Fed: It’s Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards.)

The four programs directed at helping Wall Street were the only programs that Mnuchin instructed the Fed to keep alive past December 31, 2020. Those programs are the Primary Dealer Credit Facility, which sluiced tens of billions of dollars to the trading houses on Wall Street that are owned by the big Wall Street banks; the Commercial Paper Funding Facility; the Money Market Mutual Fund Liquidity Facility; and the Paycheck Protection Program Liquidity Facility, which reimburses certain banks for loans they had provided under the Small Business Administration’s PPP program. Citigroup, the recipient of the largest bailout in history during the 2007 to 2010 financial crisis, has inexplicably received over $3 billion from that Fed program this year. (See Citigroup Has Made a Sap of the Fed: It’s Borrowing at 0.35 % from the Fed While Charging Struggling Consumers 27.4 % on Credit Cards.)

The Fed has made transaction level data available for all of its lending programs except three of the four that Mnuchin wants to keep alive. The Fed has not made one scintilla of information available about the names of the borrowers or the dollar amount loaned to specific borrowers under the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and the Money Market Mutual Fund Liquidity Facility…

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