NEW YORK–One JPMorgan Chase economist is arguing against direct payments to Americans by the federal government as a response to job losses resulting from the coronavirus pandemic, and instead saying funds should be distributed through the banking system.
As CUToday.info reported here, the Senate is moving forward with a plan in which Americans earning under certain income thresholds would receive checks up to $1,200 each, plus additional money for each child.
Jim Glassman, an economist with JPMorgan Chase, told Marketwatch.com that a better decision would be to allow banks to tell their business clients that they will be compensated for any loss of revenue caused by the cessation of activity.
“As the government wants work to stop to halt the spread of the coronavirus, they should pay for the damage caused by the stoppage,” stated MarketWatch. “The kicker is that banks would tell the businesses that the only way they would get the money is if they continue to pay their existing workforces. No layoffs.”
Why is that important: Workers wouldn’t have to go on unemployment insurance, according to Glassman.
“Under this plan, U.S. Treasury Secretary Steven Mnuchin would tell the banks, effectively, ‘We’ve got your back,’ and funnel stimulus money to the businesses,” MarketWatch reported.
The proposal could last for six weeks.
‘It Won’t Help’
Glassman believes sending $1,000 to workers at restaurants and gyms won’t help the workers or the business. “Sending money in the mail is a random blast,” Glassman told MarketWatch.
Glassman added that in his travels across the country over the last few weeks, he has discovered that “no one is confident that anyone is going to help them.”
“This is a self-inflicted wound. We’re shutting down the system [for a good reason] and we should just put companies on a holding pattern,” he said.
MarketWatch noted Sen. Marco Rubio (R-FL) has expressed support for a similar plan. Rubio told CNBC he has been exploring ways for lenders to provide businesses with money to make payroll over the next six weeks. If the loan were used totally for payroll, it would be forgiven, Rubio told the news outlet.