Stock futures tumbled Thursday night after an open dispute emerged between the Federal Reserve and Treasury Secretary Steven Mnuchin over covid emergency funds aimed at helping municipalities and small businesses.
Mnuchin wrote a letter to Fed Chairman Jerome Powell demanding the return of $ 445 billion in unused funds that are part of a massive federal bailout bill passed last spring to counter the economic effects of the pandemic. of coronavirus. In the letter, Mnuchin said the programs had achieved their goal.
In an unusual move, the Fed issued a statement in response saying. “The Federal Reserve would prefer that all of the emergency facilities put in place during the coronavirus pandemic continue to play their important role as a safety net for our still strained and vulnerable economy,” the Washington Post reported.
One of the programs, aimed at supporting municipalities, made only one loan, the Associated Press reported. Another aimed at helping small and medium-sized businesses provided loans of around $ 4 billion, according to AP.
The dispute emerged on the same day that jobless claims rose for the first time in five weeks and as the coronavirus spread uncontrollably across much of the country.
It also comes as Mnuchin’s boss, President Donald Trump, continues to make baseless allegations of electoral fraud and pursue frivolous nuisance lawsuits to keep alive the idea in his base that he won the elections. elections.
Powell urged Congress and the administration to come to an agreement on additional stimulus measures to stimulate the economy. Millions of unemployed Americans are expected to lose federal emergency aid on Boxing Day.
Futures for the Dow Industrials and S&P 500 fell 0.7% on Thursday night. At the start of the session in Tokyo, the Nikkei 225 index fell 0.6%.