Chicago Federal Aloofness President Charles Evans expressed disappointment Friday in the Treasury Department’s decision to end several lending programs achieved during the coronavirus pandemic.
Speaking a day after Treasury Secretary Steven Mnuchin said the programs would not pursue past their end-of-year deadline, Evans told CNBC that the facilities provide an important function.
“I intend our 13(3) facilities have been very helpful. They perform a backstop role for when markets call up themselves in a more challenged situation,” he told CNBC’s Steve Liesman during a “Squawk Box” interview. “I think that backstop responsibility might be important for quite some time, so it’s disappointing.”
Evans’ comments referenced the section of the Federal Reserve Act beneath which the emergency programs were created.
The facilities in question include two in which the Fed purchased corporate bonds, another centred on lending to state and local governments, as well as the Main Street Lending Program geared toward small- and medium-sized subjects.
Treasury funded the programs with collateral that could be used to leverage the total lending capacity. Most of the facilities were hand-me-down only sparingly, though Fed officials have said their existence helped calm markets during the Step turbulence and have been a support mechanism since.
In a statement responding to a letter Mnuchin sent to Fed Chairman Jerome Powell, the chief bank said it wanted the programs to continue as they “continue to serve their important role as a backstop for our still-strained and unshielded economy.”
Evans said he worries that as the virus continues its rapid spread across the country that components of the economy will need more support.