The gaping holes of the COVID-19 response package

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California Reinvestment Coalition Executive Director Paulina Gonzalez-Brito issued the following statement on the gaping holes of the COVID-19 response package:

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Despite major efforts to improve the emergency package that passed the Senate, California tenants, small businesses, homeowners and communities remain vulnerable in trying to survive the economic tsunami of this current crisis.

Large corporations will once again be bailed out with minimal protections for workers and consumers, while the small businesses that sustain families, hire workers and serve local communities are left trying to navigate precarious lifelines in stormy seas. Much of the relief in this package meant for Main Street small business is fragile, relying on banks and credit unions to lend where they have not, and necessitating small business owners in distress apply for loans and funding, or turn to overwhelmed websites that are crashing, as with the economy. Small businesses need grants to survive this crisis and pay workers, and relief from rent and mortgage payments to keep a roof over the head of their enterprises. Further, there is nothing in this bill to protect small businesses from high cost predatory providers like Merchant Cash Advance lenders that are not asked to provide any relief under this proposal, and that will be only too happy to fill the void for cash and credit that this package leaves.

What’s more, the administration has allocated $100 million to fund the costs of the business assistance in this package. How much will corporate cronies like BlackRock reap from this crisis, and how will that compare to what our neighborhood businesses will be able to access?

Gaping Holes In The Proposal

We call on Governor Newsom and California’s elected officials to fill in gaping holes in this proposal. Small businesses need access to grants, relief from commercial eviction, foreclosure, and rent gouging, and protection from financial predators. Renters in California need an immediate moratorium on all eviction proceedings for the length of this crisis. People who are homeless must be moved into safe and healthy housing. And the Governor should build on his commendable efforts with banks so that no California homeowner, regardless of the kind of loan they have, needs to worry about missed payments, foreclosures, or worsening credit during this crisis, or to apply for such relief such that vulnerable communities will inevitably fall thru the cracks and be easy prey for predatory scammers.

We need loan forgiveness and a broad moratorium on evictions and foreclosures for tenants, homeowners, nonprofits and small businesses.

We must not repeat the past mistakes of the foreclosure crisis following the 2008 housing bust; we have to invest in housing counseling agencies and legal service lawyers to connect working people to relief to which they are entitled, to ensure their rights are vindicated, and to protect against the financial scams and abuses that we know are starting to proliferate nationwide. Congress and the state of California must work in haste to pass another package that fills in the gaping holes as we come together to fight this pandemic and protect the livelihoods of so many hurting right now.

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About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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