The Federal Reserve and the U.S. Treasury, which have otherwise worked congenially and effectively in response to coronavirus, showed signs of discord in public on Thursday when Treasury Secretary Steve Mnuchin issued a letter that refused to extend emergency lending programs. His letter stated that the programs had accomplished their objectives and that markets had been stabilized. On Tuesday, Fed Chairman Jerome Powell had publicly stated that he did not think it was time for any tools to be removed from the Fed's belt.

Mnuchin and Powell seemingly pulled off an impressive crisis response together; however, Mnuchin has been facing pressure from some of his Republican colleagues to reign in what they perceived as government largesse. Earlier this month, Senator Pat Toomey (R-PA) worried publicly that Democrats might use the Central Bank to usurp the power of the purse that constitutionally resides with the Congress. Mnuchin requested the return of about $70 billion in funds from the Fed that would have been used as loss reserves for loans yet made. This rare imbroglio may be the result of the wider efforts to stymie an incoming Joe Biden Administration by President Donald Trump.

There is some legal disagreement on whether or not the Fed needs to return the requested funds...

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