The Treasury Department says Yellen will need Congress to approve the use of the defaulted Fed loan funds

US Treasury Secretary Steve Mnuchin speaks during a press conference announcing the Trump administration’s reinstatement of sanctions on Iran, at the US State Department in Washington, September 21, 2020.

Patrick Simansky | Pool | Reuters

The Treasury Department said on Monday that President-elect Joe Biden’s Treasury Secretary will need congressional approval to reuse $ 455 billion of money the Trump administration recovers from the Federal Reserve and other epidemic lending programs.

Biden is expected to name former Federal Reserve Chair Janet Yellen as Secretary of the Treasury, placing a woman in the position for the first time since the department was created in 1789.

Incumbent Treasury Secretary Steve Mnuchin said last week that he would allow some of the Fed’s underutilized coronavirus lending programs to expire Dec. 31 and allow Congress to spend the money on other assistance to businesses and individuals.

Biden’s transition team described the move, which limits the new administration’s ability to support financial markets during the outbreak, as “largely irresponsible.”

A Treasury spokesperson confirmed the Bloomberg report that the recovered money would be placed in the Treasury’s General Fund, but denied that taking it out of the Exchange Stabilization Fund would put the money off limits.

The money is linked to the end of federal lending programs for mid-sized companies, municipal bond issuers and other borrowers, the spokesman said, adding that any new use, including renewal of facilities, would require congressional approval.

Senator Ron Wyden, the top Democrat on the Senate Finance Committee, said Mnuchin’s move was “shameful” and contrasted sharply with his efforts to broker a major stimulus package before US President Donald Trump lost the election.

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“With the economy declining amid a sharp increase in the number of Covid-19 cases, Minister Mnuchin is involved in economic sabotage and is trying to tie the hands of the Biden administration,” Wyden said in a statement to Reuters.

A Treasury official said on Friday that funds that cover about $ 25 billion in existing loans from the facility will remain in the Treasury, but that any money reimbursed from the loans cannot be used for anything else without congressional approval.

At the end of 2025, according to the CARES Act passed in March, any remaining relief funds should be transferred to the General Fund and used to reduce the budget deficit.

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