Recommendations on how to encourage a national recovery from the economic effects of the pandemic – and improve access to Federal Reserve credit facilities for businesses such as manufacturing, retail, restaurants, real estate owners, and other asset-based borrowers – was the focus of testimony by Roundtable President & CEO Jeffrey DeBoer (above) on Sept. 9 before the Senate Banking, Housing and Urban Affairs Committee. (International Council of Shopping Centers news release)

The Roundtable’s written statement and oral presentation also provided the commercial real estate industry’s shared recommendations on how to provide critical federal assistance to the U.S. workforce, renter households, and business tenants to help them weather the COVID-19 crisis.  (Hearing video and witness statements)

• The Senate hearing focused on the effectiveness of the Federal Reserve’s Main Street Lending Program (MSLP) – a $600 billion loan facility established in March as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to assist small and mid-sized businesses weather the economic fallout from the pandemic.  (CQ News, Sept. 9)

• Chairman Mike Crapo (R-ID), Ranking Member Sherrod Brown (D-OH) and other Banking Committee Members heard testimony from DeBoer; Hal Scott, President of the Committee on Capital Markets Regulation; and William Spriggs, Professor of Economics, Howard University and Chief Economist, AFL-CIO. (Witnesses written testimony)

• Chairman Crapo (photo below) noted in his opening statement that the hearing would provide an update on “why the (commercial real estate) CRE market lacks access to needed support, including through the Main Street Program; and recommendations for options to get support to commercial real estate.”  (Sen. Crapo’s Opening Statement, Sept. 9)

• DeBoer emphasized the goal of the MSLP is to provide capital to mid-sized businesses that are disproportionally owned by minorities, women and veterans, who are unable to obtain capital due to COVID-related economic problems. (Law360, Sept. 9)

• The Main Street program is not working, DeBoer testified, because there is little incentive for banks to make the loans – and the program’s eligibility, affiliation and underwriting rules are not designed to meet the needs of the businesses in need.

• “The result: countless mid-sized retail businesses, restaurants, hotels, commercial and multifamily building owners are moving closer to shutting their doors forever,” DeBoer stated. (Roundtable Oral Comments)

• DeBoer recommended that to incentivize banks to participate on a larger scale, the Fed should purchase 100 percent of a Main Street loan, instead of the current 95% limit.

• He also encouraged administrative actions to expand the MSLP’s eligibility rules “… to stabilize the weakening condition of many businesses, particularly real estate owners whose businesses support millions of jobs nationwide and whose health is directly related to the health of local communities.”  (Washington Post, Sept. 9)

• “The recommendations that I have made on the Main Street Lending Program … really require no additional funds from the federal government,” DeBoer said. “They are administrative. They could be done tomorrow by the Treasury and the Fed if they wanted to.” 
  
  
• Sen. Chris Van Hollen (D-MD) commented, “I wish there was a broader recognition that getting funds into the hands tenants to pay their landlord on the residential side and also on the commercial side is something that would be very important at this time.”  (American Banker, Sept. 9)

• During Q&A with several committee members, DeBoer also addressed the importance of preserving the “rent obligation chain” – the stream of tenant rent revenues that travel through the financial system to support business workers, local government services and mortgage markets, safeguarding billions in Americans’ pension and retirement savings invested in real estate assets.  (Video of DeBoer's Testimony and Q&A with Senators)

• Committee Chairman Crapo on July 31 sent a letter to Secretary Mnuchin and Chairman Powell urging them to quickly expand the Main Street Program by setting up an asset-based lending facility, and to address commercial real estate either through access to the Main Street Program or in a separate facility.”  (Roundtable Weekly, August 14)

DeBoer’s testimony, the Fed’s efforts and prospects for congressional action regarding the economic repercussions of the coronavirus will be a focus of discussion during The Roundtable’s September 22 Virtual Fall Meeting.  (Video of DeBoer's Testimony and Q&A with Senators)

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Senate Democrats yesterday blocked Republicans’ attempt to advance a scaled-back COVID-19 relief package. The 52-47 procedural vote, mostly along party lines, did not meet the 60-vote threshold to pass, diminishing the possibility that Congress will enact another pandemic recovery measure before the November elections.  (AP, Sept. 10 and Summary of GOP bill)

• The Republican “skinny” bill (S. 178) proposed this week is approximately $500 billion less than the GOP’s $1 trillion July coronavirus stimulus proposal.  Democrats are currently advocating a package of at least $2.2 trillion following passage of the $3.4 trillion HEROES Act by the House of Representatives in May. (Axios, Sept. 10)

• Previously, Congress passed coronavirus relief in March with the $2 trillion CARES Act, which increased unemployment benefits until July 31.  Prospects that unemployed Americans may receive an additional $1,200 stimulus check remain uncertain.  (Roundtable Weekly, August 14 and C/Net, Sept. 10)

• Treasury Secretary Steven Mnuchin on Sunday stated the Trump Administration favored another COVID-19 aid package.  “We want to help businesses that are particularly impacted by this, and we’ll continue to work on proposed new legislation," Mnuchin told Fox News.  (Real Clear Politics, Sept. 6)

• Senate Minority Leader Charles E. Schumer (D-NY) yesterday said Republicans “may yet be forced to come back to the table because COVID is the major issue that’s facing the American people.”  (AP, Sept. 10)

• Congressional negotiations on another round of pandemic stimulus between Democrats and White House officials stalled in August.  President Trump then signed four executive orders aimed at providing unemployment aid, eviction protections, student loan relief and payroll tax deferments.  (Roundtable Weekly, August 14)

• One executive order authorized an additional $300 per week to unemployed beneficiaries from disaster relief funds. The Federal Emergency Management Agency recently announced those funds are near depletion and the program is closed to new applications. (BGov, Sept. 10)

• White House officials are considering additional unilateral actions to provide targeted relief, according to The Washington Post.  Stephen Moore, an economic adviser to the White House, said, “They’re trying to figure out what they can do legally, what authorities they have, and there are differences of opinion on that. Trump would like to do another flurry of executive orders that would jump-start the economy.”

Government Funding Expires Sept. 30

Lawmakers returned to Washington this week with a five-week legislative schedule in the Senate and four-weeks for the House.  In addition to COVID-19 related legislation, Congress has until Sept. 30 to pass a funding bill to keep the federal government open beyond the end of FY2020 or face a shutdown before the November elections. 

• House Speaker Nancy Pelosi (D-CA) and Secretary Mnuchin have reportedly agreed to work on a temporary funding bill without unrelated policy riders.  A spending bill would likely include continued funding for the National Flood Insurance Program and the EB-5 Regional Center Program, which provides visas to foreign nationals who pool their investments to finance U.S. economic development projects.  (CQ, Sept. 3)

• A Continuing Resolution (CR) would fund the government at current levels, yet how long such a measure would last is uncertain. Senate Majority Leader Mitch McConnell (R-KY) on Wednesday said he supports a stopgap spending bill through December, although Senate Minority Leader Schumer indicated no decisions have been made about the length of a CR.  (The Hill, Sept. 9)

Sen. Roy Blunt (R-MO), chairman of the Senate Republican Policy Committee, said yesterday, “My guess would be that if we leave in September with a CR we will not come back to do anything before the election.”  (Washington Post, Sept. 9)

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More than 160 business leaders – including 16 Real Estate Roundtable members – yesterday sent a letter to New York City Mayor Bill de Blasio urging him to address crime and deteriorating quality-of-life issues as part of the city’s efforts to ease pandemic restrictions, encourage economic recovery and reopen businesses.  (New York Times and Forbes, Sept. 10)

• The letter states, “We need to send a strong, consistent message that our employees, customers, clients and visitors will be coming back to a safe and healthy work environment.”  It adds that what must be confronted by city management is a “widespread anxiety over public safety, cleanliness and other quality of life issues that are contributing to deteriorating conditions in commercial districts and neighborhoods.”   (Partnership for New York City letter, Sept. 10)
  
  
• The letter explains that if steps are not taken quickly to address security and other livability conditions, then people will be slow to return to the city and a establish a degree of normalcy.
  
  
• Mayor de Blasio responded on twitter yesterday, stating, “To restore city services and save jobs, we need long term borrowing and a federal stimulus — we need these leaders to join the fight to move the City forward.”
  
  
• One of the signatories of the letter, Roundtable Member Scott Rechler (Chairman & CEO, RXR Realty LLC and Trustee of the 9/11 Memorial Museum) appeared on CNBC’s Squawkbox this morning to discuss the business leaders’ concerns about the city’s economic recovery and reopening.  (Rechler in photo above)
  
  
• “We don’t have a plan to build a brighter, better future for our city like we did post 9-11 and its eerily scary.  While I know we have a crisis and its going to need support from the federal government, that’s not the only solution. We need to manage our city better,” Rechler stated during the Squawkbox interview.
  
  
• An op-ed in the New York Daily News today by Rechler also encourages individuals “to safely fill our city streets, our parks, our stores, our restaurants, and our business districts.”  Rechler calls for a safe return, especially by those “… who stayed home or left the city to protect themselves and their loved ones by slowing the spread of the coronavirus.”
  
  
• New York City’s coronavirus infection rate has been reduced to a low level in recent months after a phased reopening of its economy started in June.  The infection rate in the city has been below 1% for more than one month, due to strict emergency regulations.  (Wall Street Journal, Sept. 11 and New York Gov. Cuomo’s website, Sept. 9)

Rechler’s op-ed adds, “Every lawyer, software engineer and banker working in New York’s office buildings supports five additional service jobs in retail, restaurants and small businesses, but this partnership, hundreds of thousands of jobs and livelihoods, falls apart if we all stay home.”

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