The partnership allows the Treasury to take advantage of the Fed's ability to swiftly inject money into the economy. It also effectively shifts debt off of the Treasury's balance sheet and onto the Fed's.
As Steven Mnuchin steers a multi-trillion-dollar project to save the economy from the coronavirus fallout, the question is how much risk he is willing to bear if the potential reward is preventing total economic ruin.
Now, as Mnuchin steers a multi-trillion-dollar project to save the U.S. economy from the coronavirus fallout, the question is how much risk he is willing to bear if the potential reward is preventing total economic ruin. deals totaling $4 trillion. That means Mnuchin is in a spot to reap returns from the investment, although such rewards aren't likely.
If Mnuchin's terms end up too stringent, however, some worry that could defeat the purpose of the program entirely. Even still, Mnuchin holds certain power cards in his favor as the Fed and Treasury put the structure of those loans in place. He recommended Powell for Fed chair. Trump has often put public political pressure on Powell.Last week, the Federal Reserve began to outline in broad strokes how it will begin to use the funds. It is using $75 billion of the Treasury's pot as equity backing behind a lending program that could support up to $600 billion in loans.
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