Many of the federal coronavirus relief programs will end at the end of the year. So, what will this mean for businesses? How could it impact your personal finances?
Treasury Secretary Steven Mnuchin recently told the Federal Reserve that several emergency lending funds will end at the end of the year. As a result, this will cut off many of the federal aid programs that are currently available to businesses.
As part of the CARES Act that passed back in March, Congress authorized the Treasury to use roughly $450 billion. This money was for the Federal Reserve to create emergency funding programs to fix the nation’s economic systems. As a result, Congress established programs such as the Paycheck Protection Program. These programs were for lenders to continue to extend credit to borrowers, including individuals and small businesses.
Now, several of these Federal Reserve-run programs will likely go away on December 31, their original expiration date. Mnuchin wants the Fed to give back the unused funds that Congress allocated for these programs. He claims that the returned money “will allow Congress to re-appropriate $455 billion.”
According to Forbes, here are three ways Mnuchin’s actions may impact your personal finances in the future.
1. It Could Leave the Economy in the Lurch
President-Elect Joe Biden will already be inheriting several big problems in January. For example, he must deal with the expiring moratorium on evictions. He must also deal with the end of unemployment benefits for millions of Americans. Losing the Fed’s additional backup measures to help support the economy has the potential to create a crisis for both investors and individuals.
2. No Guarantee That The “Returned Funds” Can Be Easily Appropriated
A Treasury Department spokesperson confirmed that Mnuchin plans to put the funds returned by the Fed into the Treasury’s General Fund. This targeted move means Mnuchin’s successor, former Federal Reserve Chair Janet Yellen, will not be able to access that money without congressional approval. This will make it more difficult to quickly implement additional coronavirus relief.
3. Mnuchin Requested to Continue Several Programs, But They’re Not Direct Aid Ones
To his credit, Mnuchin did say that he would like to see several programs continue. They were all funded without CARES Act money. However, none of those programs are the ones that provided direct support or loans to individuals, families, or small businesses. Yet Mnuchin says he is allowing the other initiatives to end at the end of the year so that they can put the funds they didn’t use to better use. They will presumably be used to help such small businesses and individuals. However, as stated above, there is no law that they have to be used for this purpose or that reappropriation of the funds by the incoming Biden administration will be easy.