Treasury, Fed reportedly disagree over how much risk government should take as part of lending program

The Federal Reserve and Treasury Department disagreed over how easy loan terms should be while crafting their $600 billion Main Street Lending Program meant to help support businesses through the early stages of the coronavirus pandemic, The Wall Street Journal reports.

The differing viewpoints slowed the program's start before it opened this past week, current and former government officials told the Journal. While the disagreements were over narrow design issues, the Journal notes it reflects a broader difference in approach by the two agencies.

Ultimately, the Treasury Department has been more cautious about the lending terms, preferring the government take on less risk, while the Fed supports more generous terms for borrowers.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Some Fed officials have reportedly privately expressed frustration over the situation, but on the record both sides played it cool. "Would the program be exactly the way I would have designed it, or exactly the way someone else would have designed it? No, but we all need to work together, and we have worked together quite effectively," said Boston Fed President Eric Rosengren.

Treasury Secretary Steven Mnuchin doesn't even consider the holdup the result of disagreements. Instead, he said the two sides simply got into "even more levels of complexity that required considerable thought." Read more at The Wall Street Journal.