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Nursing homes are coming under more scrutiny during the coronavirus pandemic, this time for complaints about efforts to confiscate coronavirus stimulus checks, The Hill reported. Lawmakers on both sides of the aisle are calling on the Trump administration to ensure nursing homes and assisted living facilities aren’t improperly seizing the checks from residents following alerts from the Federal Trade Commission (FTC) and state attorneys general. State and federal authorities have recently notified the public about complaints of long-term care facilities demanding residents on Medicaid turn over their relief payments. Those alerts prompted prominent lawmakers to lean on various federal agencies, urging them to investigate the issue and make it clear to facilities that they aren’t entitled to the checks. “These economic impact payments were not designed to reimburse people,” Rep. Gwen Moore (D-Wis.) told The Hill. “And we have provisions that protect the elderly.” Moore, a member of the House Ways and Means Committee, authored one of several letters to federal agencies on the nursing home issue this week. In her letter, she urged the Treasury Inspector General for Tax Administration to exercise its oversight authority to protect residents of nursing homes and assisted living facilities.

Recent data from ABI provided by Epiq Global shows that 722 companies sought bankruptcy protection around the U.S. last month, a 48 percent increase from the year-ago period, CBSNews.com reported. Chapter 11 filings also jumped in April and March, as states started imposing business restrictions amid the coronavirus outbreak. Although Congress has passed relief programs designed to help businesses survive shelter-in-place orders, including the Paycheck Protection Program and Economic Injury Disaster loans, the aid won't help floundering companies for long, one expert said. "As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy," said ABI Executive Director Amy Quackenboss. Some analysts expect a wave of bankruptcy filings, particularly in hard-hit industries like retail and the energy sector, which has been slammed by falling oil prices and plunging demand during the virus. Boeing CEO Dave Calhoun also has predicted that a major U.S. airline will go bankrupt this year. Meanwhile, companies with healthy revenue streams, options for cutting costs and access to credit will rebound, predicted investment strategists Indranil Ghosh and Gina Sanchez. Although car sales have slumped, for instance, automakers are expected to bounce back as pent-up demand recovers and as many people shun public transportation due to virus concerns.

Two committees will be holding hearings today in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information. 

Also today, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here. 

A top economic adviser to President Trump said the White House “would definitely support” another round of aid to shore up the economy as U.S. businesses begin to reopen amid the coronavirus pandemic, the Wall Street Journal reported. White House economic adviser Kevin Hassett said Tuesday the odds of a “Phase Four” stimulus package “are very, very high,” even if data on output and jobs continue to surpass expectations. On Friday, the Labor Department reported that U.S. employers added 2.5 million jobs in May and that the unemployment rate, which economists had expected to soar to 19.5 percent, instead fell to 13.3 percent. Hassett said he expects the economy to add another 3.5 million to 4 million jobs in June. Even so, he said, work remains to be done by Congress to ensure that a solid recovery takes root. “There are a lot of things that really are necessary to make sure that once we open up that we actually lift off,” Hassett said. “The odds of a Phase Four deal is something we talked with the president about last week. We even had a small group meeting this morning to talk about it. The odds of a Phase Four deal are very, very high.”

U.S. Labor Secretary Eugene Scalia said that he opposed the extension of $600 a week in unemployment benefits that workers are receiving as a result of the coronavirus pandemic, an option lawmakers are debating as they negotiate the next stimulus bill, the Wall Street Journal reported. Scalia said the enhanced payments, included in a federal stimulus package signed into law at the end of March, will have served their usefulness by the time the current program expires at the end of July. “That recognizes we’ll be in a very different place in July where the opportunity for people to return to work will be far greater,” Scalia said yesterday at a hearing before the Senate Finance Committee. He said that Friday’s jobs report from the Labor Department confirmed millions of Americans were able to return to work as states reopened their economies. “The recovery in the job market has actually happened more quickly than Congress expected in late March,” Scalia said. Extending the extra benefits is one issue Democrats and Republicans have been sparring over as they discuss policy options for the next coronavirus stimulus package. Republicans are concerned that the supplemental benefits, which give many workers more money than they were making before the crisis, will discourage people from returning to work, slowing the economic recovery. Democrats want to extend funding for the larger unemployment payments, arguing that if businesses don’t rebound quickly, the additional money will keep millions of workers afloat.

A bankruptcy judge backed USA Gymnastics in its lawsuit to get one of the small business loans created by Congress to cover payroll costs during the coronavirus pandemic, saying that the embattled national body is likely to succeed in defeating the federal government’s rule excluding organizations in bankruptcy from obtaining the loans, the Wall Street Journal reported. USA Gymnastics filed for bankruptcy in December 2018, facing hundreds of lawsuits over its handling of decades of abuse by women’s team physician Larry Nassar, and as the U.S. Olympic & Paralympic Committee sought to revoke its status as the sport’s official governing body. The bankruptcy filing halted depositions and discovery in the lawsuits, for which mediation negotiations have dragged on for more than two years. It also halted the USOPC’s decertification efforts, creating an opportunity for USA Gymnastics to seek a reprieve. But the effort had an unexpected consequence when USA Gymnastics and other national sports governing bodies found themselves on the brink of a new financial crisis — the postponement of several lucrative domestic meets and the windfall expected from the 2020 Olympic Games, which may now be held in 2021. As dozens of its peers rushed to secure the loans from the federal government, USA Gymnastics had its application for the Paycheck Protection Program rejected by the Small Business Administration because it is in bankruptcy. USA Gymnastics then sued the federal government. Dozens of lawsuits challenging the SBA’s rule have been filed across the U.S. by small businesses, rural hospitals and Catholic dioceses arguing Congress never intended to exclude PPP loans from potential borrowers in chapter 11 bankruptcy. Judges who have ruled so far on the SBA’s position have come out both for and against the federal government, prompting appeals to higher courts. Read more. (Subscription required.) 

Be sure to read today's RDW column on recent bankruptcy cases and PPP loans. 

The federal control board that oversees Puerto Rico’s finances sued the U.S. territorial government on Monday, asking courts to order it to provide documents related to a failed multimillion-dollar purchase of Covid-19 testing kits and other medical supplies, the Associated Press reported. The board said that it requested the documents two months ago and said that while the government has released some information, it has “completely ignored” repeated calls to turn over all documents. “The rules for how the government spends money must be clear and transparent at all times, including under the immense pressure of emergencies,” Natalie Jaresko, the board’s executive director, said in a statement. The government has already turned over more than 1,000 documents, and the island‘s Health Department has requested more time to confirm the existence of the documents sought by the board, said Omar Marrero, executive director of Puerto Rico’s Fiscal Agency and Financial Advisory Authority. The lawsuit was filed nearly two months after Gov. Wanda Vázquez announced she was canceling all contracts awarded to people and companies whose names have been publicized as part of a local and federal investigation into an attempted purchase of $38 million worth of Covid-19 testing kits. Vázquez had initially defended the purchase order that was eventually canceled, resulting in the government recovering its $19 million deposit.

When it comes to Illinois bonds, Citigroup Inc. says the worst-case-scenario has already been priced in, Bloomberg News reported. The difference between the yields on the state’s debt and top-rated securities — a key measure of risk — widened to a record high in May on speculation that the financial hit from the coronavirus will make it the first state to see its credit rating cut to junk. That selloff pushed its yields to junk-bond levels, surpassing those on some debt issued by still bankrupt Puerto Rico. But Citigroup analysts Vikram Rai, Jack Muller and Vedanta Goenka said in a note to clients Monday that a default like Puerto Rico’s is not a risk since the state has many ways to contend with its tax shortfalls. That includes borrowing from the Federal Reserve’s municipal lending facility, as it did last week. The analysts’ comments reflect greater optimism on Wall Street as much of the nation begins to reopen, even though record unemployment and business shutdowns are leaving governments facing massive budget shortfalls.

Two committees will be holding hearings on Wednesday in the Senate and House of Representatives looking at key issues amid the economic fallout due to the Covid-19 pandemic. Jovita Carranza, Administrator of the U.S. Small Business Administration, and Treasury Secretary Steven Mnuchin will testify before the Senate Small Business Committee for a hearing on Wednesday at 10 a.m. ET titled "Implementation of Title I of the CARES Act." Click here for more information. 

Also on Wednesday, the House Financial Services Subcommittee on Housing, Community Development and Insurance will hold a hearing at noon ET titled "The Rent Is Still Due: America's Renters, Covid-19 and an Unprecedented Eviction Crisis." To view the legislation being considered, the hearing witness list and a link to the live webcast, please click here.