On The Money: Trump officials struggle to get relief loans out the door | Dow soars more than 1600 points | Kudlow says officials ‘looking at’ offering coronavirus bonds
Happy Monday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
THE BIG DEAL– Trump officials struggle to get coronavirus-relief loans out the door:
The Trump administration is struggling to work out the kinks of a coronavirus small business loan program after a chaotic start on Friday.
- Some banks say they are unable to access Small Business Administration (SBA) platforms, while industry leaders say there are unanswered questions about applying for loans and how to take advantage of them.
- On Monday, the SBA loan processing platform crashed and was down for hours, preventing lenders from processing any loans, Bloomberg News reported. The system was back up on Monday afternoon.
- Restaurants and startups are among those who have had trouble navigating the program.
The Hill’s Alex Gangitano tells us more about the snags here.
Ambitious start: The Treasury Department and SBA last week rolled out applications for the $349 billion Paycheck Protection Program (PPP), designed to provide loans for small businesses to meet payroll and other basic expenses during the coronavirus pandemic.
- Bank and credit union employees are vetting, approving and processing the applications, which totaled 78,000 loans for $22 billion as of Sunday morning.
- But the financial industry warned that it had been given late and unclear guidance from the government on how to sort through and process thousands of applications.
To help keep the system running smoothly, the Federal Reserve announced Monday it will purchase PPP loans from banks and lenders, freeing up cash to issue new loans under the SBA program and through conventional lines of credit.
There could also be broader concerns among banks that could complicate the success of the program.
Former Federal Reserve Chair Janet Yellen told House Democrats on a Monday conference call that banks are worried about being held accountable for abuses of the program while facing pressure from the administration to get money out quickly, according to a person on the call.
Yellen added that Congress could act to give banks legal cover if they were deceived by a PPP loan applicant who committed fraud.
Democratic Massachusetts Sens. Elizabeth Warren and Ed Markey are also pressing the administration to clarify the rules and regulations lenders should follow when furnishing the loans.
“We urge you to move quickly to issue additional guidelines and clarifications to ensure that loans are disbursed quickly, that all businesses can participate and that lenders give mom and pop businesses the same access to loans that they give their more sophisticated small business clients. All small businesses need to have equal access to this help,” wrote the senators.
LEADING THE DAY
Dow soars more than 1600 points on hopes of slowing coronavirus spread: Stocks closed with major gains Monday on hopes that the coronavirus pandemic would peak sooner in the U.S. than had been expected.
The Dow Jones Industrial Average closed with a gain of 1,627 points, soaring almost 7.7 percent Monday. The S&P 500 rose 7 percent and the Nasdaq composite gained 7.3 percent on the day.
A sharp rise in Dow futures trading Sunday paved the way to a 1,000-point rally in industrials when the market opened Monday, fueled largely by optimism from President Trump and potentially encouraging data from New York.
- Trump said during an unplanned Sunday press conference that he saw the “light at the end of the tunnel” of the coronavirus pandemic, which has claimed more than 10,000 lives in the U.S. as of Monday afternoon, according to the Johns Hopkins University tracker. The president’s comments came just hours after U.S. Surgeon General Jerome Adams compared the pandemic to the Sept. 11, 2001, terrorist attacks “happening all over the country.”
- New York also reported on Sunday a decline in daily COVID-19 deaths, which dropped from 630 deaths on Saturday to 594 deaths Sunday. New York Gov. Andrew Cuomo (D) said Monday that the slowdown was “hopeful, but it’s also inconclusive,” adding that if new cases are plateauing, “we are plateauing at a very high level” and there is “tremendous stress on the health care system.”
Kudlow says administration ‘looking at’ offering coronavirus bonds: The White House is considering offering a coronavirus-related Treasury bond equivalent to a war bond to spur investment in the economy, National Economic Council Director Larry Kudlow said Monday.
“We’ve kicked this around before. [Treasury Secretary Steven Mnuchin] and I and the president and others talked about selling long-term paper,” Kudlow told reporters at the White House.
Asked if a coronavirus bond was a serious proposal, Kudlow cautioned that the administration was “just looking at it” and hoped to first see the effects of the recently passed $2.2 trillion economic relief package.
The concept of a coronavirus bond was raised in a separate CNBC interview by Jim Cramer. Kudlow called it “a great idea.”
GOOD TO KNOW
- JPMorgan Chase chief executive Jamie Dimon predicted Monday that the U.S. is heading into a “bad recession” amid the coronavirus pandemic that would expose the bank to “billions of dollars of additional credit losses.”
- Former Consumer Financial Protection Bureau (CFPB) Director Richard Cordray on Monday outlined a number of steps that the agency should promptly take to help consumers during the coronavirus pandemic.
- Senate Minority Leader Charles Schumer (D-N.Y.) said on Monday that he will name Bharat Ramamurti, a former aide to Sen. Elizabeth Warren (D-Mass.), to serve on a five-person board that will oversee corporate loans under the coronavirus relief package.
- Florida and Nevada are among the states most vulnerable to an economic shock from the coronavirus pandemic, according to a recent study by Oxford Economics.