These Aren’t Loans. They Are Grants. Why Is America Ashamed Of The Paycheck Protection Program?

These Aren’t Loans. They Are Grants. Why Is America Ashamed Of The Paycheck Protection Program?

Thursday brought no shortage of drama for dazzled, weary and in some cases, physically ailing, market watchers. US jobless claims surged for a third consecutive week as 6.61 million more Americans filed for unemployment benefits, bringing the three-week total to nearly 17 million. Meanwhile, the Fed sprang into action, announcing $2.3 trillion in new lending and liquidity support via a combination of new facilities and enhancements to existing programs. Jerome Powell is now in the market for e
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7 thoughts on “These Aren’t Loans. They Are Grants. Why Is America Ashamed Of The Paycheck Protection Program?

  1. Anything to pretend it is not socialism/crony capitalism.
    Future Corona testing will not be on a national level POTUS. That would be road to national health.
    Republicans are watching everything they bragged about and instill fear about convolute. So the only answer is confuse the life out of it at the risk of unforeseen consequences when simple and upfront would do the nation some good. This is turning into the kind of stuff you see in a divorce. Here it is divorcing reality. McConnell walked from the table with the old”We Tried” today.
    For the moment CAPITALISM is actually dead, but let’s pretend not.

  2. Confused about what will happen when small business finally are able to apply for these “grants” but their employees have already departed and applied for unemployment insurance???

  3. This may be naive and wrong but it was a thought. Funding is available at 35bps. Loan is 100bps. There is no risk. Leverage it 20 times, leverage it 100 times. Presto, on has double digit returns. What am I missing?

    1. Well, good question. The fact that the PPP loans are likely to be forgiven means the SBA guarantee will probably be realized for a ton of these “loans”. I have no idea whether the SBA is on the hook for the interest, although I’m sure there’s a definitive answer for that out there somewhere and there was at least 24 hours worth of wrangling over the decision to bump the interest rate up from 50bps to 100bps. Who knows if that would have even been an argument if the Fed facility had been in place prior to the discussions (i.e., if banks knew they could fund them at 35bps). But I cannot imagine Steve Mnuchin is just going to let banks milk this by effectively taking 65bps of free carry courtesy of the SBA and levering it up in some other trade. If that were the case, then you’d expect to see the money center banks with the capacity to line everything up quickly fall all over themselves to get these things out the door now that the Fed facility is there. But, like you, I’m just speculating here.

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