Treasury Secretary Steve Mnuchin said he expects to have a small business loan program up and running in the coming week while workers can expect aid from the $2 trillion stimulus package in the form of direct deposits or checks in about three weeks.
The administration is focused on getting money out quickly, Mnuchin said on “Fox News Sunday,” one of two television appearances for the day. “That’s a combination of small business loans that will be available this week” and checks to household which he called “bridge checks.”
“Any FDIC bank, any credit union, any fintech lender will be authorized to make these loans” to a small business subject to certain approvals, Mnuchin said.
Meanwhile, Agustin Carstens, head of the Bank for International Settlements, called on banks worldwide to suspend dividend payments, for now, to focus on what he called “the last mile” of getting money out to small businesses.
Mnuchin was the White House’s lead negotiator on a $2 trillion economic stimulus package signed into law by President Donald Trump Friday to buffer the economy against the wide-scale shutdown and joblessness as the coronavirus swept through the country.
The magnitude of the economic devastation being wrought by the coronavirus pandemic was laid bare on Thursday when the U.S. government reported an unprecedented surge in the number of people seeking jobless benefits.
Wall Street’s Role
A total of 3.28 million people filed for unemployment insurance in the week ended March 21, dwarfing previous highs in Labor Department reports published since 1967.
In a separate interview on CBS News’s “Face the Nation,” Mnuchin said the stimulus package should provide economic relief to workers and business for about eight to ten weeks.
Unlike the Troubled Asset Relief Program, where the Treasury compelled banks to beef up their capital during the financial crisis, Mnuchin told CBS, “We are not going to force money on any companies.”
The firms have to request aid, he said, and the Wall Street banks helping to manage the assistance will be working for “very reduced rates.”
Lawmakers are urging the administration to get the funds out quickly. Senator Mike Crapo, an Idaho Republican who is chairman of the Senate Banking Committee, wrote to Federal Reserve Chairman Jerome Powell and Mnuchin Saturday, urging both to “work quickly” to issue guidance so that “businesses — including small and medium-sized businesses — states, municipalities and Tribes, understand what programs and facilities are available.”
Suspend Dividends
The Fed has announced its intention to launch a Main Street Lending Facility to loan directly to medium-sized businesses while the stimulus bill recommends support for the markets that finance states and municipalities.
Carstens, chief executive officer of the BIS, a coordinator for global central banks based in Basel, Switzerland, said banks worldwide should suspend all dividend and stock buyback programs to retain more capital for lending as he called for stronger forms of credit support.
“The U.S. Federal Reserve’s decision to enter the corporate bond market marks a bold step in the right direction,” Carstens wrote in a column for the Financial Times this weekend. “But more may still be needed to build the last mile to the small businesses at the end of the line.”
Carstens recommended a government-guaranteed loan program equal to the amount of taxes small businesses paid in 2019 that could be securitized and then refinanced through the central bank. The stimulus bill already outlines how lending should be conducted for small business and lists payroll costs as one criteria.