Fed returns money to Treasury for terminated emergency programs

The Federal Reserve has returned about $42 billion to the U.S. Treasury, and will soon transfer another $20 billion in excess funds connected to emergency lending facilities that stopped offering new loans last month, the central bank said Thursday in documents posted on its website.

The transfers will fulfill the promise made by Fed Chair Jerome Powell on Nov. 20 to comply with Treasury Secretary Steven Mnuchin’s controversial demand that the programs be terminated.

The Treasury committed $195 billion from its Exchange Stabilization Fund to provide a backstop for the four programs and had transferred $102.5 billion to the Fed. The programs are retaining about $40 billion to protect against potential losses on the credits the programs extended before their closure.

The four programs are the Term Asset-Backed Securities Loan Facility, the Municipal Liquidity Facility, the primary and secondary corporate credit facilities, and the Main Street Lending Program. All except Main Street were closed on Dec. 31. The termination of Main Street was delayed until Jan. 8 to allow time to finish processing a late surge of loan applications.

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