• Assistant Attorney General Brian Benczkowski, the head of the Justice Department’s criminal division, said in an interview that 15 to 20 of the largest loan processors and the Small Business Administration have been contacted as prosecutors look into how loans were issued under the Paycheck Protection Program. He said the review has uncovered potentially problematic applications from companies that inflated their payroll costs or number of employees and misrepresented their business. (Bloomberg)

• U.S. officials are exploring ways to retaliate against China for its handling of the coronavirus outbreak, according to four senior administration officials with knowledge of the matter, which two sources said could include eliminating part of the United States’ interest payments to China. When asked about these plans, President Donald Trump said the “sanctity of the dollar” would be harmed if the United States canceled some of the U.S. debt held by China, but he said there are alternative ways to punish the country, such as raising $1 trillion through tariffs on Chinese goods. (The Washington Post)

• The SBA and Treasury Department issued a new rule that limits PPP loan amounts to $20 million for corporate groups, defined as businesses that are “majority owned, directly or indirectly, by a common parent.” The change comes as  large, publicly traded companies have been criticized for receiving loans meant for small businesses. (Bloomberg)

Mnuchin sends top deputy to fix small-business loan mess
Zachary Warmbrodt et al., Politico

The move is the latest attempt by the Trump administration to course-correct the massive rescue effort.

Secret Service paid Trump’s D.C. hotel more than $33,000 for lodging to guard Treasury secretary
David A. Fahrenthold et al., The Washington Post

The Secret Service rented a room at President Trump’s Washington hotel for 137 consecutive nights in 2017 — paying Trump’s company more than $33,000 — so it could guard Treasury Secretary Steven Mnuchin while he lived in one of the hotel’s luxury suites, according to federal documents and people familiar with the arrangement.

Pelosi floats almost $1T for states in next relief package
Mike Lillis, The Hill

Speaker Nancy Pelosi (D-Calif.) said Thursday that Democrats will push for including almost $1 trillion in the next coronavirus relief package to help states and local governments hit hard by the pandemic.

Fed Faces Risky, Inflationary Divorce From Treasury Post Covid
Rich Miller, Bloomberg

The coronavirus has forged a once unlikely alliance between Donald Trump’s Treasury Department and the central bank he often derided. The close embrace is resurfacing concerns about the Fed’s independence in the long run.

Ex-TARP watchdog says Washington is to blame for large companies receiving small business loans
Kevin Stankiewicz, CNBC

Large companies that received money from the small business loan program are not to blame, according to former TARP watchdog Neil Barofsky.

Millions of gig workers are still waiting for unemployment benefits
Rebecca Rainey, Politico

Most of the estimated 23 million independent contractors and gig workers made newly eligible last month for unemployment benefits during the coronavirus pandemic are still waiting for relief.

Republican-led states signal they could strip workers’ unemployment benefits if they don’t return to work, sparking fresh safety fears
Tony Romm, The Washington Post

Iowa, Oklahoma and other states reopening soon amid the coronavirus outbreak are issuing early warnings to their worried workers: Return to your jobs or risk losing unemployment benefits.

Crisis begins to hit professional and public-sector jobs once considered safe
Andrew Van Dam, The Washington Post

As the novel coronavirus pandemic brought business to a halt, the pain rippled outward, blowing up sector after sector. According to a detailed analysis of unemployment claims, no industry was left untouched.

Stymied in Seeking Benefits, Millions of Unemployed Go Uncounted
Nelson D. Schwartz et al., The New York Times

As state agencies grapple with new guidelines and sheer volume, many workers are frustrated in filing claims and omitted from jobless tallies.

ECB Offers Cheap Loans to Banks to Stem Economic Downturn
Tom Fairless, The Wall Street Journal

The European Central Bank rolled out its cheapest ever loans for eurozone banks and said it would consider expanding a €750 billion ($815 billion) bond-buying program, amplifying its firepower to contain the economic fallout from the coronavirus pandemic.

U.S. Equity Futures Drop on Earnings; Dollar Rises: Markets Wrap
Todd White, Bloomberg

U.S. equity futures sank as investors began May pondering dreary corporate news and the persistent economic turmoil caused by the coronavirus. The dollar rose with Treasuries as a risk-off mood prevailed on what is a holiday in many major markets.

Biggest U.S. banks says they submitted $45.8 billion in loans for emergency aid program
Elizabeth Dilts Marshall and Michelle Price, Reuters

The two largest U.S. banks, JPMorgan Chase & Co and Bank of America, said on Thursday that they submitted almost half a million applications worth nearly $46 billion to the Small Business Administration’s Paycheck Protection Program for small businesses hurt by the coronavirus shutdown.

Small businesses served by JPMorgan Chase may finally be getting some money
Thornton McEnery, New York Post

After coming under heavy criticism for processing coronavirus stimulus loans to large, publicly traded clients like Shake Shack and Ruth’s Chris Steakhouse, JPMorgan Chase on Thursday told 220,000 clients that its Payroll Protection Program loans have been processed, with all of them being small business owners who had been frozen out of the first round, sources said.

Critics see politics as small lenders get assist in small-business relief
Jim Saksa, Roll Call

The Small Business Administration and Treasury Department have favored small lenders over bigger banks during the Paycheck Protection Program’s second round, leading some to accuse the White House of letting reelection politics interfere with saving companies pushed to the brink of insolvency by the coronavirus.

Wells Fargo Stops Accepting Home Equity Credit Line Applications
Hannah Levitt, Bloomberg

Wells Fargo & Co. will temporarily stop accepting applications for home equity lines of credit, following a similar move by rival JPMorgan Chase & Co.

Banks Seek Emergency Petition to Reinstate Mass Robocalling. Will It Be Limited to Financial Coronavirus Relief?
Lee Fang, The Intercept

A WINDOW MAY soon open for banks and lenders to use robocalls during the coronavirus crisis. Backed by a push to provide consumers with economic relief, a more expansive exemption could lead to unsolicited debt collection and marketing.

New York MTA Delays $1 Billion Bond Sale as It Scrambles for Funds
Matt Wirz, The Wall Street Journal

New York’s Metropolitan Transportation Authority postponed a roughly $1 billion bond sale this week as it grapples with a drastic reduction in ridership and cuts in state aid, highlighting how the global pandemic is upending the finances of mainstays in the normally staid municipal debt market.

CLO Engineering Is No Match for Covid-19 as Payments Get Cut Off
Sally Bakewell and Lisa Lee, Bloomberg

Wall Street’s engineering was supposed to turn loans to junk-rated companies into relatively safe bonds known as collateralized loan obligations. As the new coronavirus slams the economy, some investors are finding that safety to be fleeting.

Homeowners Seeking Mortgage Payment Relief Pass 3.8 Million
John Gittelsohn, Bloomberg

About 7.3% of U.S. mortgages entered forbearance plans in April, providing temporary relief to more than 3.8 million borrowers who have lost income during the coronavirus pandemic.

Mortgage rates sink to all-time lows and may be headed lower
Kathy Orton, The Washington Post

Mortgage rates plummeted this week to the lowest levels in the history of Freddie Mac’s survey, which dates to 1971.

IRS Denies Tax Deductions Tied to Small-Business Loans
Richard Rubin, The Wall Street Journal

Small businesses that get their loans forgiven can’t take tax deductions for associated wages and other expenses, the IRS said in a ruling that shrinks the potential value of the popular Paycheck Protection Program.

Government probe finds companies claiming carbon capture tax credit didn’t follow EPA requirements
Rachel Frazin, The Hill

The vast majority of money claimed through a clean air tax credit over the past decade were done by companies that had not been properly complying with its requirement, according to an internal government watchdog. 

Rich Americans Seize Historic Chance to Pass On Wealth Tax-Free
Ben Steverman, Bloomberg

Rich Americans are taking advantage of an unprecedented opportunity, made possible by the coronavirus pandemic, to transfer money to their children and grandchildren tax-free.

‘Banking in America is broken:’ The CEO of $5.8 billion challenger bank Chime wants to put the customer first during the coronavirus crisis
Callum Burroughs, Business Insider Prime

Chime was in the news recently after it announced plans to hand a $200 advance to customers as part of an extension to its popular SpotMe feature. That’s after the government announced the CARES Act, a $2 trillion package to provide aid to businesses but also individual stimulus checks.

We Need Emergency Rental Assistance to Address COVID-19 Fallout
Priscilla Almodovar and James Whelan, Morning Consult

Many tenants struggled to make their rent payments on April 1, and while some may have been able to dip into their savings or were still employed in March, the most severe impacts of the economic shutdown on rent payments are likely yet to come. 

Despite the rocky publicity, the small-business loan program is really working
Andy Puzder, The Washington Post

Media coverage of the federal government’s efforts to help small businesses has focused lately on big companies’ grabbing loans that were meant to help smaller ones weather the novel coronavirus economic shutdown. But the numbers from the Cares Act’s Paycheck Protection Program are coming in, and they’re impressive.

How Valuable is Financial Flexibility When Revenue Stops? Evidence from the COVID-19 Crisis
Rüdiger Fahlenbrach et al., Fisher College of Business Working Paper No. 2020-03-007

The COVID-19 shock creates a sudden temporary sharp shortfall in revenue for firms. We expect firms with greater financial flexibility to be better able to fund themselves in the presence of a revenue shortfall and to benefit less from the news concerning policy responses to the crisis on March 24.