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U.S. Plans to Keep Markets Open as Virus Spreads, Mnuchin Says

Bloomberg logoBloomberg 3/13/2020 Saleha Mohsin

(Bloomberg) -- U.S. Treasury Secretary Steven Mnuchin said he’ll do everything he can to keep financial markets open as the coronavirus spreads, and that he’s in contact with the Federal Reserve about ensuring liquidity.

“We intend to keep the markets open -- that’s a sign of confidence for people,” Mnuchin said in a CNBC interview early Friday.

Mnuchin, who serves on the White House coronavirus task force, said he’s in “constant conversations” with Fed Chairman Jay Powell.

“There will be liquidity available -- whatever we need to do, whatever the Fed needs to do, whatever Congress needs to do, we will provide liquidity,” Mnuchin said. “There will be a massive amount of liquidity.”

Mnuchin also said he has spoken with President Donald Trump and congressional leaders about the need to address a “short-term liquidity issue” with U.S. airlines.

Read More: Mnuchin Says He Spoke With Trump, Congress on Airline Liquidity

Long-term impact

U.S. stocks on Friday rebounded from the worst day since 1987 amid signs policy makers around the world are acting to stave off the economic fallout from the coronavirus. Oil jumped.

Congress is near a deal on a coronavirus spending bill. The European Union prepared to suspend government spending rules, and regulators in Italy and Spain banned short-selling on some stocks. China’s central bank said it would pump in $79 billion to bolster the economy.

Market turmoil has pushed the White House to expand the proposed response to the virus, which threatens to bring the U.S. and world economies to a halt.

Trump has pitched a plan to Congress for a temporary payroll tax reduction through the end of the year. Democrats are seeking emergency paid sick leave, enhanced unemployment benefits, and free coronavirus testing, among other things.

Related: Inside the Oval Office, a Fierce Fight Over Trump’s Virus Speech

Mnuchin downplayed concern about long-term damage to the economy, saying that “by the end of the year you can expect we’re going to have a big rebound in economic activity.”

Mnuchin also encouraged banks to use the Fed’s so-called discount window, which grants emergency access to cheap cash.

“There’s no stigma for going to do the discount windows,” he said.

Student debt relief

Mnuchin indicated that temporary student-debt relief is on the table for the administration, a measure backed by Democrats including Senator Elizabeth Warren of Massachusetts and New York Representative Alexandria Ocasio-Cortez‎.

“That’s on our list of 50 different items we will be bringing to the president for a decision,” he said.

American students made about $115 billion of loan repayments in 2018, equal to some 0.6% of GDP, according to a Moody’s report last year.

--With assistance from Josh Wingrove and Ben Holland.

To contact the reporter on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Justin Blum, Joshua Gallu

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

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