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Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin testified before the House Financial Services Committee Wednesday to discuss the oversight of the Treasury and the Fed’s pandemic response and implementation of CARES Act provisions. Under the CARES Act, the Treasury Department has coordinated implementation of the paycheck protection program (PPP) with the Small Business Administration and the Fed created and expanded several lending facilities, while also using its available tools to their fullest potential, with support from the Treasury.

Of note, several committee members voiced opposition for Mnuchin's recent announcement that some of the Fed's emergency lending facilities would expire at the end of the year and return the unused funds. Mnuchin stated he wanted to repurpose the un-used funds for small businesses.

Mnuchin went on to note that he was acting in accordance with the law to terminate the funds since they were not reallocated and urged Congress to do so. Powell agreed that more fiscal relief is needed to support economic recovery and called on Congress to act quickly. Mnuchin’s announcement to return the unused funds was also a point of contention when Mnuchin and Powell testified before the Senate Banking Committee on Tuesday.

In addition, Mnuchin stated that he did not think the government sponsored enterprises (GSEs) should be released from conservatorship unless they had sufficient capital buffers. NAFCU continues to urge the FHFA to work with Congress on this issue and has called on Congress to codify certain safeguards before removing the GSEs from conservatorship. However, the association is supportive of efforts to protect taxpayers and ensure long-term success for the GSEs.

Ahead of Wednesday’s hearing, NAFCU outlined several measures under the CARES Act that should be extended or modified to ensure credit unions have the resources and flexibilities needed in order to restore normal operations and recover from the coronavirus pandemic.

NAFCU will continue to work closely with Congress to ensure credit union priorities remain top of mind with lawmakers and regulators as relief discussions continue. Of note, a $908 billion Senate relief package created as a "down payment" for possible future expanded relief – originally unveiled on Tuesday by  a group of bipartisan Senators – was endorsed by president-elect Joe Biden yesterday.