All Things in Moderation

Vital Statistics:

Stocks are higher this morning on optimism that things are turning the corner with the COVID-19 crisis. Bonds and MBS are up.

The bond market closes early today, and markets will be closed on Friday.

6.6 million people filed for unemployment benefits last week. That puts the number of COVID-19 job losses at around 16.5 million total.

The Fed unveiled a new round of measures to support the economy this morning. They include a program to augment the SBA’s Paycheck Protection Program by supplying liquidity to banks that participate, allowing them to pledge the actual loans as collateral. The Fed will also purchase loans under the Main Street Lending Program. The TALF program will be increased and more direct aid will be sent to state and local governments.

The Main Street Program will offer 4 year loans to companies employing up to 10,000 workers with revenues under 2.5 billion. P&I will be deferred for one year. The banks will retain 5% of the loan, and can sell the remaining 95% to the Fed.

Interestingly there is still no facility for mortgage servicers. It looks like the issue is finally getting the attention of lawmakers, however we still don’t have anything. In his comments at the Brookings Institution, Fed Chairman Jerome Powell said that he is watching the mortgage servicers closely, which means the Fed is probably considering some sort of relief.

Looks like Wells is out of the penalty box, at least as far as SBA loans go.

Jerome Powell said the Fed will act “forcefully and aggressively” to until the economy fully recovers. “Many of the programs we are undertaking to support the flow of credit rely on emergency lending powers … We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” Powell said in prepared remarks for an online event hosted by the Brookings Institution.

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