In: Economics
Government class: current responses by state & federal governments to manage the twin viral and economic threats we are facing about COVID-19.
The US is facing a growing COVID-19 epidemic that has taken the lives of nearly 24,000 Americans and infected over 600,000 people in all 50 states. In addition, the U.S. has introduced a number of initiatives including travel bans, social distancing, state of emergency declarations, closing of schools, bars and restaurants, and increased monitoring.
Coronavirus Support, Relief and Economy Protection Act ("CARES Act") is estimated at US$ 2.3 trillion (about 11 per cent of GDP). The Act provides I US$ 250 billion to provide people with one-time tax rebates; (ii) US$ 250 billion to extend unemployment benefits; (iii) US$ 24 billion to provide the most needy with a nutritious safety net; (iv) US$ 510 billion to avoid corporate bankruptcy by offering grants, incentives and the Federal Reserve system 13(3); (v) US$ 359 billion in forgivable Small Business Administrative
US$ 8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act and US$ 192 billion First Coronavirus Response Legislation for Families. Together they provide about 1 percent of GDP for: I virus testing; transition to Medicaid funding states; production of vaccines, therapeutics, and diagnostics; support for responses to the Centers for Disease Control and Prevention. (ii) 2 weeks of sick leave paid; up to 3 months of emergency leave for infected persons (2/3 pay); food aid; transfers to states to fund expanded unemployment insurance; (iii) Extension of loan incentives to the small business administration
In March, the federal funds rate was lowered by 150bp to 0-0.25bp. Purchase of securities from Treasury and Agency in the sum as needed. Repository grew overnight and on word. Lowered discount window borrowing rates. Reduced existing cost of swap lines with major central banks and extended the duration of FX operations; expanded U.S. dollar swap lines to more central banks; provided global and international monetary authorities temporary repo facilities.
Action which is administrative. Lower the debt ratio of the community bank to 8 per cent. Provide extension change to accounting norm Current Expected Credit Loss. PPP covered loans will earn a risk weight of zero percent, and properties obtained and subsequently pledged as collateral to the MMLF and PPPLF facilities will not result in additional regulatory capital requirements. Allow early adoption of "the standardized approach for measuring counterparty credit risk". And there will be a gradual phase-in of restrictions on distributions when a firm's capital buffer declines.
Fannie Mae and Freddie Mac have announced assistance to borrowers, including providing 12-month mortgage forbearance and waiving related late fees, suspending forbearance-related reporting to delinquency credit bureaus, suspending borrowers' foreclosure sales and evictions for 60 days, and offering options for loan modifications.