COVID-19 Phase 3.5 Stimulus: What May be Included in Financials / Housing?

The Cowen Insight

Pressure is growing for Congress to boost the size of the Paycheck Protection forgivable loan program. We believe this could be a vehicle for a smaller package that includes requirements for the Federal Reserve to stand up facilities for mortgage servicers and midsized businesses. We also believe there could be some bipartisan interest in helping renters.

What is Happening

Discussions are accelerating on what could be included in the next stimulus to help the economy recover from COVID-19.

The President may have only signed the Phase 3 stimulus into law 10 days ago, but focus already is turning to what Washington should include in its next legislative package.

Our overall message is that Washington both recognizes that the Phase 3 bill was insufficient and there is the willpower to push through another package to help the economy recover from the health crisis.

Below we look at provisions important for financials and housing that are likely to get included either on Thursday by the Senate, in what the House could add to its version or in legislation that might surface later this month as another follow-up bill.

Provisions More Likely to See Bipartisan Backing

• More small business protection money
• Mortgage servicer liquidity
• Mid-size business loan facility
• More cash payments to individuals
• Rental assistance fund
• Hotel loan forgiveness for those devoting at least half their rooms to provide shelter for those with COVID-19 or to those who became homeless
• Free cashing of stimulus checks
• Pandemic insurance facility
• Federal Reserve help for local governments

More Partisan Demands

We expect Democrats will push for more of their consumer-focused proposals:

• Ban on evictions for renters
• Ban on overdraft fees
• Force private student lenders to suspend repayments
• Free bank accounts for individuals