Fed to sell off assets from an emergency loan program

Jun 2, 2021, 2:35 PM | Updated: 7:48 pm

WASHINGTON (AP) — The Federal Reserve said Wednesday that it will start selling off the holdings of one of its emergency lending programs created last year to stabilize financial markets at the height of the pandemic crisis.

The Fed will begin winding down the portfolio of the Secondary Corporate Credit Facility, which at the close of last year held $14.2 billion in assets.

The asset sales from the facility will be “gradual and orderly and will aim to minimize the potential for any adverse impact on market functioning,” the Fed said.

The corporate facility was one of a number of emergency lending vehicle closed on Dec. 31 in a decision by then-Treasury Secretary Steven Mnuchin.

That action drew criticism from Democratic lawmakers who contended at the time that Mnuchin was trying to restrict efforts by the Federal Reserve to support the economy just as President-elect Joe Biden was taking office.

The Fed announcement came as speculation has increased that the central bank could be preparing to make a decision on when it might start trimming its $120 billion in monthly purchases of Treasury bonds and mortgage-backed securities. Those purchases are being made to give the economy a boost by putting downward pressure on long-term interest rates.

The Fed said that its announcement on selling off the small amount of holdings in the corporate lending facility was not related to its handling of monetary policy. The sales from the corporate loan fund are expected to be completed by the end of the year.

The emergency lending programs came in response to credit markets nearly freezing in March 2020 as the pandemic triggered lockdowns in the United States and resulted in the loss of 22 million jobs last spring.

In his December decision, Mnuchin said in a letter to Fed Chairman Jerome Powell that the programs he was allowing to end had “clearly achieved their objectives.”

But in a rare disagreement between the Fed and Mnuchin, the central bank said at the time that it would have preferred that the “full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy.”

However, the economy, which had slowed at the end of last year, has gained strength again this year, helped by a new $1.9 trillion rescue package Biden pushed through Congress in March as well as the rollout of coronavirus vaccines. The Fed’s remaining emergency loan programs that were not closed have seen only moderate use this year.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

Iraqi currency crash halts after meeting with U.S. official

BAGHDAD (AP) — Iraq’s currency ended its nosedive after a meeting between the Iraqi Central Bank head and a top U.S. Treasury official. Under Secretary of the Treasury for terrorism and financial intelligence Brian E. Nelson said in a statement Saturday that he had met with Central Bank of Iraq Governor Ali al-Allaq in Istanbul […]
12 hours ago
Associated Press

Gas prices dip in NJ, around nation as cold weather returns

TRENTON, N.J. (AP) — Gas prices dipped in New Jersey and around the country at large as cold weather descended on parts of the nation following an unusually warm January. AAA Mid-Atlantic says the average price of a gallon of regular gas in New Jersey on Friday was $3.42, down three cents from last week. […]
12 hours ago
Associated Press

Kansas police responding to overdose call shoot, kill man

KANSAS CITY, Kan. (AP) — Police in Kansas say an officer shot and killed an armed man after he fled from the scene of an opioid overdose on a bicycle. The Kansas City, Kansas Police Department said in a news release that officers spotted the man pedaling away Friday night from a home where they […]
12 hours ago
FILE - A Tesla Model Y Long Range is displayed on Feb. 24, 2021, at the Tesla Gallery in Troy, Mich...
Associated Press

Tesla hikes price of Model Y after US alters tax credit rule

DETROIT (AP) — Tesla has raised prices on its Model Y in the U.S., apparently due to rising demand and changes in U.S. government rules that make more versions of the small SUV eligible for tax credits. The Austin, Texas, electric vehicle company bumped up the price of the Model Y Long Range version by […]
12 hours ago
FILE - People visit Magic Kingdom Park at Walt Disney World Resort in Lake Buena Vista, Florida, on...
Associated Press

Disney World unions vote down offer covering 45,000 workers

ORLANDO, Fla. (AP) — Union members voted down a contract proposal covering tens of thousands of Walt Disney World service workers, saying it didn’t go far enough toward helping employees face cost-of-living hikes in housing and other expenses in central Florida. The unions said that 13,650 out of 14,263 members who voted on the contract […]
12 hours ago
Jessica Day-Weaver holds a ceramic hand print of her daughter, Anastasia, at her home, Thursday, Fe...
Associated Press

‘Died suddenly’ posts twist tragedies to push vaccine lies

Results from 6-year-old Anastasia Weaver’s autopsy may take weeks. But online anti-vaccine activists needed only hours after her funeral this week to baselessly blame the COVID-19 vaccine. A prolific Twitter account posted Anastasia’s name and smiling dance portrait in a tweet with a syringe emoji. A Facebook user messaged her mother, Jessica Day-Weaver, to call […]
12 hours ago

Sponsored Articles

Fiesta Bowl Foundation

Celebrate 50 years of Vrbo Fiesta Bowl Parade magic!

Since its first production in the early 1970s, the Vrbo Fiesta Bowl Parade presented by Lerner & Rowe has been a staple of Valley traditions, bringing family fun and excitement to downtown Phoenix.
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
(Desert Institute for Spine Care photo)...

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
Fed to sell off assets from an emergency loan program