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Newell: Feds must act fast to implement rescue package

Public health and economic health must be considered together

Newell Normand
March 31, 2020 - 3:24 pm

The Coronavirus Aid Relief and Economic Security Act has been passed and signed, and the next critical step is for Federal officials to quickly execute on implementation and ensure an efficient, streamlined process. It’s tough to be in the dark about how long the pandemic will last, and even tougher not knowing when aid will reach you. To better understand how this package is designed to work and when we will start to feel its effects, Newell invited Gulf Coast Bank and Trust President Guy Williams onto the show Tuesday afternoon.

“The unemployment numbers are increasing as we expected, and everyone is saying this is the make or break week for us, both from a public health and economic standpoint. Your thoughts?” Newell began.

“I agree,” Williams said. “In regard to public health, our worst peak is expected to be April 10th and we’re going to ramp up to that if the projection is accurate, and the good news is it ramps on down from there and by the end of April, we’re going to be looking good. Nothing good in the short run, but if this projection is accurate, April 10th will be the worst day in terms of medical care and then it will get better. The economic effect is going to be a little slower to develop and will peak later. Companies like Macy’s are essentially laying off their entire workforce. Airbnb folks are letting go of their staff and managers, hotels doing the same, airlines are cutting flights. We expect employment to continue to decline for at least the rest of this month.”

“Morgan Stanley and others have issued some warnings saying that they believe no matter how successful the US may be in shortening the duration of this, what’s going on in Europe and elsewhere will pull us into a global recession,” Newell continued.

“They’re probably right, but there’s a world of difference between a recession, a deep recession, and a depression,” Williams said, “We’re actually due for a recession, where typically you have a decline in GDP for two quarters and then you come back up. This may meet the classic definition of a recession because we will have a decline in production for the first two quarters, but realistically, the third quarter should be up, and if we get it right, the fourth quarter should be up substantially.”

“Being a community banker, you can explain this for the benefit of the listening audience,” Newell said. “There are those banks that are SBA-approved and SBA-preferred that will be processed under these Paycheck Protection Program the SBA loans. Could you describe the infrastructure of the banking community and how that works?”

“The SBA has a good website that will tell you which banks are preferred lenders. These are banks like ours who have been in the program, are familiar with the process, and are ready to go right now. Other banks are eligible to participate, and the SBA said they will approve any bank that wants to participate, so everyone’s invited. SBA loans can only be made once the SBA issues standard operating procedures and issues an application. The normal SBA application is detailed and complex, but that’s not what Congress envisioned for this process, they envisioned a streamlined, simple application and as soon as we get that from SBA we’ll push that out. We and many of our preferred lenders have online places to signup and get in the queue. You’d be well-advised to start gathering your tax returns, your payroll information, your mortgage expense so you're ready because those will be the key items necessary for this loan.”

Hear the rest of the interview, plus a question-and-answer session with WWL listeners, in the audio player below.

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