Clyburn, Waters Urge Mnuchin to Restore Critical Economic Programs

Washington, D.C. (December 17, 2020) – Today Rep. James E. Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, and Rep. Maxine Waters, Chairwoman of the Committee on Financial Services sent a letter to outgoing Treasury Secretary Steven T. Mnuchin urging the reversal of his decision to prematurely end the Federal Reserve’s emergency lending facilities and his demand that the Fed return all unused CARES Act funds.  The letter transmitted a new legal analysis from the nonpartisan Congressional Research Service (CRS) that directly contradicts Secretary Mnuchin’s testimony that these economically harmful actions are legally required.

“Your recent decision to request that the Federal Reserve Board of Governors (Fed) return unused CARES Act funds risks crippling the Fed’s emergency lending programs at a time when we should instead be using every tool at our disposal to support our economic recovery,” the Members wrote. “We write today to urge you to protect American livelihoods by extending these programs and rescinding your request to the Fed to return CARES Act funds that have already been invested in these lending facilities, consistent with your authority.”

In its new analysis, CRS found that Section 4029 of the CARES Act clearly permits the Treasury Secretary to extend the Fed lending facilities, which would enable the Fed to continue making loans into 2021. CRS drew this conclusion directly from the clear and unambiguous text of the CARES Act:
 

“[B]y its plain terms, Section 4029(a) appears to establish only the expiration date for the Treasury Secretary’s authority to make new investments of CARES Act funds in the SPVs.  It does not appear to impose any limitations on the Secretary’s discretion to extend the operation of SPVs in which the Secretary has invested CARES Act funds before December 31, 2020.  Accordingly, a court would likely conclude that Section 4029 does not prohibit the Treasury Secretary from extending the CARES Act-funded Fed facilities beyond December 31.”

CRS’s legal opinion is consistent with the position taken by Treasury before the November election, according to media reports and correspondence from October 2020 in which Treasury stated it was considering “whether any changes to this expiration date would be warranted.”   

Today’s letter also emphasizes the continued need for these programs to help struggling Americans: “During this time of unprecedented hardship, the federal government should be doing everything in its power to support the economic recovery, not stripping the Fed of critical economic tools.  As the Fed recently stated, it ‘would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.’  Indeed, Fed Chair Powell testified before the Senate Banking Committee that no central banker would want to remove backstops in the midst of an emergency.”

The letter also requested that Secretary Mnuchin produce all legal opinions and other documents related to his decision to terminate these programs.

Click here to read today’s joint letter.

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