Over the objections of the Federal Reserve, Treasury Secretary Steven Mnuchin has decided to allow several emergency lending programs to expire, prompting warnings of market instability amid the worsening of the coronavirus pandemic.

Federal Reserve Chair Jerome Powell had urged Mnuchin to extend the programs, which are due to expire Dec. 31, citing the surge in COVID-19 cases and an economy that still has “a long way to go” to recover.

But in a letter to Powell released to the public after markets closed Thursday, Mnuchin said the emergency credit facilities “have clearly achieved their objectives” and ending them would free up $455 billion in funds that could be spent elsewhere by Congress.

The facilities, including the Main Street Lending Program, have backed corporate credit and municipal-borrowing markets and provided loans to small and midsize businesses and nonprofits. The Treasury Department launched them with the Fed in March and April after the pandemic threatened to freeze the flow of credit to small businesses, large companies, cities and states.

“The Federal Reserve would prefer 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,” the central bank said in a statement on Thursday.

At the U.S. Chamber of Commerce, chief policy officer Neil Bradley said the “surprise termination” of the programs would “prematurely and unnecessarily tie the hands of the incoming [Biden] administration, and closes the door on important liquidity options for businesses at a time when they need them most.”

As The Wall Street Journal reports, “With markets in much better shape and the economy improving, Mr. Mnuchin faced pressure from some Republican lawmakers and some within the Trump administration to wind the programs down.”

But David Wilcox, a former chief economist at the Fed now at the Peterson Institute, warned that “If the situation unravels and really goes south this could prove to be a very damaging step. Secretary Mnuchin will go down in history as the man who took away a safety net when it was really needed.”

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