Coronavirus crisis: Feds should use banks to help small biz, homeowners
Further to my ideas to help stabilize the economy in last week’s column — some of which came to be implemented, and are now in the proposed bill — I have a few more suggestions.
I propose that the Treasury and the Federal Reserve use banks — at little-to-no profit — as conduits to expedite small business loans and mortgage refinances nationwide, since roughly half the country works for small businesses and roughly half the country owns a home.
So businesses with under, say 50 people, should all be able to get direct debt or equity injections via their existing local banks, where they already have a relationship. The funding should be provided by the Federal Reserve and/or the Treasury (they must partner on this).
The businesses should receive two months’ worth of traditional deposits, based on an average of their deposits over the past year. The equity injection would mandate that the business rehire the same employees and gig workers it had prior to the coronavirus outbreak — in the event it does not, the money becomes a loan due to the Federal government.
Also, let’s have all of the banks offer to re-strike mortgages at today’s lower rates if no payments have been missed in last six to 12 months. No lengthy paperwork, no lawyers, no expenses for the consumer.
The banks are just the pass- through here — all banks or mortgage investors will be kept whole by the government, which would reimburse the mortgage servicer or bank for funds lost due to the rate reduction. Nothing changes except the interest rate. Yes, people could refinance on their own, but it’s a cumbersome and very costly process.
Additionally, let’s retrofit empty hotels into hospital overflow treatment centers. That will help hotels and their workers, who can be employed there in support capacities. And the retrofitted buildings will be a valuable long-term asset in the event of another national emergency.
Each of these can be done quickly and directly, precisely where needed.
Washington, vote your country today. Vote politics in November.
View it as economic triage.
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