FOR IMMEDIATE RELEASE
Wednesday, March 18, 2020
Washington, D.C. – Dennis M. Kelleher, President and Chief Executive Officer of Better Markets, issued the following statement regarding the quickest way to help Main Street families facing coronavirus-related layoffs and loss of paychecks:
“More than half of all jobs in the U.S., nearly 80 million, are at high or moderate risk due to the crisis, according to Moody’s Analytics. That’s an unemployment rate above 50%, which is highly likely because the coronavirus pandemic is causing an unprecedented synchronized global economic shutdown. With most Americans living paycheck to paycheck and with little or no savings, that will create a human, economic and financial catastrophe as soon as the first paycheck is missed, which has already happened for some workers.
“There is an urgent need to get cash into the hands of workers and to prevent massive layoffs. Quickly sending $1,000 or $5,000 is a necessary first step, but it will be grossly inadequate. The best way to quickly get people enough money is to condition any federal assistance to any company in order for the company to continue paying workers’ wages, tips and benefits to anyone out of work due to the coronavirus crisis. All employers who do that would have those costs fully reimbursed by the government and they would then be eligible for other aid as well. Employers would thereby become the delivery vehicles for efficiently getting federal aid to Main Streets families very fast.
“The current focus on aiding companies and industries to stop a wave of corporate bankruptcies is wrong. Preventing airlines, cruise ships, and trains without passengers or other companies without customers from going bankrupt is irrelevant right now. Those companies’ fixed costs for leases, debt payments, contractual obligations and many other financial responsibilities are what will push them into bankruptcy. But those costs have nothing to do with their employees, who will just be laid off while the corporation pays or restructures its other debts, including executive compensation agreements.
“While it may make sense to help companies pay some of those other costs by providing low interest loans or in exchange for equity, prohibiting layoffs and requiring those companies to pay their employees’ wages, tips and benefits must be done first and as a condition of any other aid. In addition to enabling workers to feed their families, this will have several additional key benefits. First, people will stay quarantined and therefore slow the spread of the virus and end it much more quickly. This will ‘bend the curve.’ Second, workers will be able pay their bills, including rent, mortgages, credit cards and other debts. This will in turn support landlords, other businesses and the financial industry, which would otherwise go bankrupt due to defaults and nonpayment by everyone without a paycheck.
“Any company that gets public aid must also help itself by not wasting its limited cash on share buybacks or dividends, which all must be suspended for at least the duration of the crisis. Also, executive compensation and bonuses must be limited to reasonable amounts. The country cannot afford another no-strings bailout like 2008 when Wall Street’s biggest firms were saved with taxpayer dollars, but still paid themselves $22 billion in bonuses for 2009.
“In 2008, Congress and the President passed a $700 billion TARP bailout and financial regulators used as much as $29 trillion to effectively nationalized the global financial system. Today, they must use trillions of dollars to bailout Main Street by guaranteeing employers’ payment of wages, tips and benefits and taking other actions. This must be done first and fast, along with transparency, accountability and public oversight. Otherwise, social and political upheaval if not chaos are just weeks away.”
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.