Senator Chuck Grassley calls for more aggressive pandemic relief fund lending
Senator Chuck Grassley is urging the US Treasury to be more aggressive in pushing coronavirus relief funds into the economy to offset the impact of the pandemic.
Treasury Secretary Steven Mnuchin said this week that the $ 454 billion federal loan programs passed in March to protect the economy were working as expected. He went on to say that he did not plan to facilitate access to these loan programs because “there is not much more we can do.”
Instead, the Treasury Secretary suggested reallocating the remaining $ 259 billion to these programs for other spending.
He attributed the low participation in some of the programs to the need for potential borrowers to obtain grants, rather than loans, which would require additional funding from Congress.
However, Grassley, chairman of the Senate Finance Committee, said Mnuchin ‘is not acting aggressively enough to encourage the (Federal Reserve) to make greater use of it.
The argument for the funds is that every dollar loaned spurs $ 10 in economic activity – a $ 4.5 trillion boost to the economy, Grassley said Wednesday.
However, he saw a reluctance to use funds meant to support Federal Reserve loans “in the same way the Fed supports banks.”
“I think there was some discouragement at the Mnuchin Fed about this,” the Iowa Republican added. “And so it hasn’t worked as efficiently as it should, but I think there’s still a need for it.”
Grassley also sees the need for another round of coronavirus relief, as the Fed already has interest rates close to zero and has told Congress it plans to keep them there for three or four years.
“So there isn’t a lot of gas the Fed can throw on fire to keep this economy on the recovery,” he said.
Grassley has expressed reluctance to increase pandemic aid for state governments, which he says have not used existing programs. A $ 500 billion loan program for state and local governments only resulted in two loans, he said.
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Senator Chuck Grassley speaks to voters at a town hall on July 7 in Columbus Junction. Grassley, chairman of the Senate Finance Committee, on Wednesday urged the US Treasury to be more aggressive in pushing coronavirus relief funds into the economy. (Liz Martin / The Gazette)