In this week’s roundup, we look at a virtual Senate during which leaders of the Treasury Department and Federal Reserve discussed the use of federal dollars for coronavirus economic relief. In addition, we provide a summary of the Small Business Administration’s Paycheck Protection Program loan forgiveness instructions, and an announcement by the Securities and Exchange Commission that its annual Government-Business Forum will be held virtually this year.
In First CARES Act Review, Fed and Treasury Share Contrasting Outlook
Congress has spent nearly $3 trillion in taxpayer dollars to blunt the economic impact of the coronavirus pandemic since March, and lawmakers summoned the nation’s two fiscal policy leaders in charge of overseeing federal relief for the first time Tuesday to review how the aid packages are being used and whether more support is needed.
In the first quarterly review of the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell appeared before a session of the Senate Banking, Housing and Urban Affairs Committee, which was held remotely in observance of social distancing guidelines.
Powell said the passage of the CARES Act has allowed the Federal Reserve and the Treasury to disperse more than $2.6 trillion in emergency loans, which was critical in dampening the historic drop in economic output and rising unemployment.
Mnuchin and Powell expressed positions that reflected differing views on the prospects for a swift economic recovery from the coronavirus outbreak.
Echoing the views of the White House, Mnuchin said the biggest threat facing the economy is waiting too long to restart commercial activity after two months in which millions of Americans have lost jobs. “There is the risk of permanent damage,” he said.
According to the latest figures from the Labor Department released Thursday, an additional 4 million workers filed for unemployment, bringing the nine-week jobless tally to more than 40 million.
However, Powell challenged the idea that restarting the economy as soon as possible would necessarily bring about the swift, V-shaped recovery the White House anticipates if health risks are not addressed first.
“The number one thing, of course, is people believing that it’s safe to go back to work and go out,” he said. “That’s what it will take for people to regain confidence.”
OCC Chief Expected to Step Down
The Office of the Comptroller of the Currency’s head officer is expected to step down this week.
Joseph Otting, who has served as OCC comptroller since 2017 is expected to resign after an overhaul of rules governing the Community Reinvestment Act, according to a report from the Wall Street Journal.
Otting’s decision is being driven by disagreements over the Community Reinvestment Act with congressional Democrats and other financial regulators, including the Federal Deposit Insurance Corporation and the Federal Reserve, the report said.
Powell once again suggested additional federal aid could be required, after making two public appearances last week in support of more government action to combat rising unemployment and prevent a wave of bankruptcies. “The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II,” he said.
The Federal Reserve is also preparing to launch the Main Street Lending Program, which is designed to provide loans to small and medium-sized businesses.
SBA Releases Instructions for PPP Loan Forgiveness
The Small Business Administration released instructions last week for companies to seek loan forgiveness from the Paycheck Protection Program.
The instructions inform borrowers about how to apply for forgiveness of their PPP loans, including several measures to reduce compliance burdens and simplify the process for borrowers.
The measures include options for borrowers to calculate payroll costs, the ability to include some non-payroll expenses, step-by-step instructions for how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness, and the addition of new exemptions.
SBA said it will also issue regulations and guidance to further assist borrowers in the near future. Read more about PPP loan forgiveness here.
SEC Small Business Forum to Be Held Virtually
The Securities and Exchange Commission has decided it will virtually host its 39th annual Government-Business Forum on Small Business Capital Formation.
This year’s forum, which is scheduled for June 18, will be conducted via livestreaming and video conferencing and will highlight challenges faced by small businesses in the current environment as well as success stories from startups and small businesses across the country.
The event will feature discussions about women-owned, minority-owned and rural businesses and their investors, as well as the potential paths for the next generation of public companies.
“The Forum provides an important opportunity for us to engage directly with the small business community, hearing firsthand from small businesses and their investors about their experiences in capital raising,” SEC Chairman Jay Clayton said in a statement. “Every year we take back valuable insights that shape our perspectives on capital formation and investor protection efforts.”
This is the second year that the Office of the Advocate for Small Business Capital Formation will host the forum.
The forum will begin with a session highlighting perspectives and insights from thought leaders across the capital formation marketplace, followed by two consecutive sessions where participants will develop capital formation policy recommendations for Congress and the SEC.
“We look forward to empowering small businesses and their investors across the country to share their perspectives on how we can improve capital raising policies,” said SEC Advocate for Small Business Capital Formation Martha Legg Miller.
Benjamin Glick is an associate editor of Middle Market Growth.