Yellen would need Congress to approve the use of the loan funds recovered from the Fed, according to the Treasury

WASHINGTON (Reuters) – President-elect Joe Biden’s Treasury Secretary will need Congress to approve the reuse of $ 455 billion in funds the Trump administration is withdrawing from the Federal Reserve and other pandemic loan programs , the Treasury announced on Monday.

Biden is expected to appoint former Federal Reserve Chairman Janet Yellen as Secretary of the Treasury, putting a woman in the post for the first time since the department was established in 1789.

Current Treasury Secretary Steve Mnuchin said last week he would allow some underused coronavirus loan programs to the Federal Reserve to expire on Dec.31 and allow Congress to spend the funds on other aid to businesses and individuals.

Biden’s transition team called the move, which restricts the new administration’s ability to support financial markets during a worsening pandemic, “deeply irresponsible.”

A Treasury spokesperson confirmed a Bloomberg report claiming the recovered money would be placed in the General Treasury Fund, but denied that withdrawing it from the Exchange Stabilization Fund would put the funds out of reach.

The funds are tied to the expiration of the Fed’s loan programs for midsize companies, municipal bond issuers and other borrowers, the spokesperson said, adding that any new uses, including the renewal of facilities, would require the approval of Congress.

Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, said Mnuchin’s decision was “shameful” and marked a stark contrast to his efforts to negotiate a major stimulus deal before US President Donald Trump don’t lose the election.

“As the economy recedes amid skyrocketing COVID-19 cases, Secretary Mnuchin is engaged 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 covering about $ 25 billion in existing facility loans would remain in the Treasury, but any money repaid on the loans could not be used for anything else without Congressional approval.

By the end of 2025, according to the CARES Act passed in March, any remaining relief funds are to be transferred to the General Fund and used for budget deficit reduction.

Reporting by Heather Timmons and David Lawder; Editing by Cynthia Osterman and Bill Berkrot

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