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Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.) failed to strike a deal for a new stimulus package during a 90-minute meeting Wednesday but said they will continue negotiating, with time running out until the election, Bloomberg News reported. “We still don’t have an agreement, we still have more work to do,” Mnuchin told reporters, adding, “We’ve made progress in a lot of areas.” Pelosi said that she and Mnuchin were seeking some “further clarification” on each others’ positions and that “our conversations will continue.” The speaker said that the House will go forward with a vote Wednesday night on a $2.2 trillion Democratic stimulus plan she described as “our proffer” in negotiations with the White House. That legislation is less than the $3.4 trillion bill Democrats passed in May, but still more than Republicans have said they could accept. Senate Majority Leader Mitch McConnell (R-Ky.) said earlier that it was rife with “poison pills” that have nothing to do with pandemic relief. Read more.

In related news, The Trump administration has proposed including a $20 billion extension in aid for the battered airline industry in a new stimulus proposal to House Democrats worth over $1.5 trillion, White House chief of staff Mark Meadows said yesterday. “There’s $20 billion in the most recent proposal for the airlines that would give them a six month extension,” said Meadows. Meadows declined to provide the total value of the White House’s latest proposal but said the figure is “certainly above the $1.5 trillion that has been articulated to date.” “As you get above $1.5 trillion, it gets extremely difficult to justify based on the facts,” he cautioned, explicitly stating that $2 trillion was too much. “If it starts with a 2, it’s going to be a real problem,” he added. Read more.

The Treasury Department said yesterday that it would begin forgiving loans granted to small-business owners under the Paycheck Protection Program, following banks’ and borrowers’ complaints that the process had been bogged down, the Wall Street Journal reported. The government expects to approve and pay forgiveness requests by late this week or early next, a Treasury spokesperson said. The applications are generally expected to be approved quickly, with the exception of loans above $2 million that will get added scrutiny. Business advocates, banks and lawmakers have raised concerns that the process of turning the loans into grants is too complex and slow under the $670 billion federal program, designed to help small businesses respond to the economic fallout of the pandemic with forgivable government-backed loans distributed through banks. Since it launched an online portal for loan forgiveness in early August, the Small Business Administration has received more than 96,000 applications from businesses seeking to have their loans forgiven — but none had been approved, William Manger, SBA’s chief of staff and associate administrator, told House lawmakers last week.

Though the biggest U.S. companies may be going bust at a slower pace, smaller firms are bumping bankruptcy filings back to levels seen during the summer months, according to Epiq AACER, Bloomberg News reported. About 620 companies in the U.S. filed for chapter 11 protection this month through Sept. 25, a 48 percent increase over the same period last year, according to the legal services provider. June and July saw 609 and 644 filings this year, respectively. Large U.S. companies have been helped by abundant liquidity after intervention by the Federal Reserve. Smaller firms were shut out, leaving them more exposed to bankruptcy as government support programs expired with little progress on fresh stimulus in Congress. “We will continue to see filings for companies that had been the most disrupted by Covid and are operating in a zero revenue environment,” said Deirdre O’Connor, managing director of corporate restructuring at Epiq.

The pandemic has battered New York City businesses, with almost 6,000 closures, a jump of about 40 percent in bankruptcy filings across the region and shuttered storefronts in the business districts of all five boroughs, Bloomberg News reported. “By late fall, there will be an avalanche of bankruptcies,” said bankruptcy lawyer Al Togut. “When the cold weather comes, that’s when we’ll start to see a surge in bankruptcies in New York City.” Already, dwindling tax revenue has led to cutbacks in municipal services. Trash on sidewalks, unkempt parks and an increase in shootings have made it more difficult to persuade workers to return to offices, more than 150 executives told the mayor in a letter this month. “It’s a crisis, and we need to act — our economy can’t recover without saving small businesses,” said city Comptroller Scott Stringer, a candidate in next year’s mayoral election. The pandemic could permanently close as many as a third of New York’s 230,000 businesses, according to the Partnership for New York City, a business group. “Retail and real estate will continue to decline in New York until you can reignite the office traffic,” said Joseph Malfitano. Many New York City business owners who give up don’t even bother filing for bankruptcy, which can cost as much as $25,000, according to bankruptcy attorney Leslie Berkoff. Owners just lock the doors and walk away. “Nobody’s going to chase you right now,” said Berkoff. “A lot of your vendors probably aren’t going to survive either.” Almost 6,000 New York City businesses closed from March 1 to Sept. 11, according to Yelp, the website of user reviews. Over 4,000 of those closed permanently.

House Democrats released a scaled back $2.2 trillion proposal to extend support to the U.S. economy in face of the continuing damage from the coronavirus pandemic, Bloomberg News reported. The plan follows through on discussions last week to prompt a last-ditch attempt at negotiations with the White House and break an impasse on COVID-19 relief that’s lasted since early August. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin talked yesterday after the Democratic plan was released and plan to speak again today, Pelosi’s spokesman said. While the details of the legislative text adds clarity to the talks, the top-line spending level is no closer to that so far supported by Republicans. President Donald Trump has indicated he could support as much as $1.5 trillion in aid — still higher than the $650 billion put forth in a “skinny” aid package by Senate Republicans earlier this month. Should no deal be forthcoming, House Democrats have said they aim to proceed on their own in voting on the new plan, allowing the party’s candidates in the Nov. 3 elections to highlight a recent vote on coronavirus relief. The last vote was on the bigger, $3.4 trillion HEROES Act back in May. A key source of division has been Democrats’ push for large-scale aid to state and local authorities. The plan released yesterday has $436 billion for one year of assistance, less than a previous demand for $915 billion, which had triggered scorn among Trump administration officials who called it a bailout for poorly run states. The Democratic plan includes new aid for airlines, restaurants and small businesses that wasn’t in in the original package passed by the House in May, and it has more than double the amount for schools. 

Americans feeling the economic weight of the coronavirus are about to enter their third month without crucial government aid that helped keep millions of households afloat during the recession, The Hill reported. Two months have passed since Congress and the White House allowed emergency COVID-19 protections and safety net programs to expire. Those provisions, enacted in late March under the CARES Act, were credited with preventing an even worse economic downturn. Now, families are struggling to get by without supplemental unemployment funding, and many small businesses are reaching the end of financial lifelines that were extended by the federal government in the spring and summer. The lapse of emergency measures is expected to create lasting damage to the economy, making it even harder to return to pre-pandemic levels of growth and unemployment. “The damage on these families can scar for years,” said Andrew Stettner, an unemployment expert at the left-leaning Century Foundation. One of the biggest losses is the $600 in additional weekly benefits that Congress approved in the CARES Act. Economists across the political spectrum credit that provision with keeping consumer spending from cratering during one of the sharpest and most destructive downturns in the nation’s history. Despite broad bipartisan support for the CARES Act, Republicans have argued that the federal benefit was too high, pointing to some studies that showed 68 percent of recipients were earning more with the benefit than they did while working. GOP lawmakers said that discrepancy was a disincentive for people to go back to work, further slowing the recovery. Democrats countered with a slew of studies showing the benefit was having no tangible effect on the labor market at a time when unemployment was at historic highs.

America’s small businesses are slightly more bullish about their own survival than five months ago, with a majority now saying they expect to be operating beyond six months even if current conditions persist, according to a new survey, Bloomberg News reported. Sixty percent of business owners said that they will be able to remain open for more than a half-year, up from 46 percent in April, according to the poll, conducted by Morning Consult on behalf of Verizon Business. The survey firm questioned owners and decision makers at 600 small and midsize firms from Aug. 26 to Sept. 4. As prospects of a new stimulus deal remain slim after negotiations stalled in the U.S. Congress, small-business advocates have warned that the nation is on the precipice of widespread business failures and bankruptcies amid the COVID-19 pandemic. While it’s premature to say whether that will happen, a significant minority, 28 percent, indicated they may not make it through the next few months without additional government relief. Among other findings in the survey, hospitality and accommodations businesses are the least confident in their longtime survival prospects, with 47 percent expecting to operate beyond six months if conditions don’t improve. The most optimistic respondents were in the property and real-estate industry, with 78 percent expecting to survive even under present conditions.

House Democrats have started drafting a stimulus proposal of roughly $2.4 trillion that they can take into possible negotiations with the White House and Senate Republicans, according to House Democratic officials, Bloomberg News reported. The bill could get passed by the House next week. While smaller than the $3.4 trillion package the House passed in May, it remains much larger than what Senate Republicans have said they could accept. President Donald Trump has indicated he’d be willing to go as high as $1.5 trillion. “When you are talking about $2.2 trillion and $1.5 trillion you are in deal-making territory” said Representative Dan Kildee (D-Mich.). House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer had earlier pressed the White House for a $2.2 trillion package. As the top-line figure remains well above what the Trump administration has favored, the new House bill may do little on its own to resolve the impasse in talks that’s persisted since August. Senate Republicans have been unable to coalesce around an earlier $1 trillion proposal, and instead backed a $650 billion plan that ended up getting blocked by Democrats as insufficient. The bill adds to the previous $2.2 trillion Pelosi-Schumer plan with help for the U.S. airline industry to avert massive job losses, which could start Oct. 1 when restrictions expire from a prior round of federal assistance. Also included is small-business aid and a bailout for restaurants. 

As much as $380 billion from the U.S. Congress’ last big coronavirus aid package is unused and could help households and businesses if lawmakers approve, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin said yesterday, Reuters reported. That is far short of the $500 billion to $1 trillion many economists had expected in new fiscal stimulus for the flagging recovery. But rising tensions between Republicans and Democrats have made a new relief package ahead of the Nov. 3 election look increasingly unlikely. The unused money, authorized by Congress in March as part of a $2.3 trillion aid package but not yet spent, could go a long way to tide over businesses and keep people who have lost work from losing their homes. The Treasury still has $200 billion in unused funds earmarked to backstop emergency programs launched by the U.S. central bank after the coronavirus outbreak, Mnuchin said. 

Top U.S. economic policymakers opened the door yesterday to further aid for small businesses hit by the coronavirus-triggered recession, but differed over how broad it might extend and the manner in which it should be delivered, Reuters reported. In testimony before the House of Representatives Financial Services Committee, Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell were pressed by lawmakers concerned the multi-trillion-dollar effort to battle the economic fallout from the pandemic had left a broad swathe of businesses vulnerable, from the smallest corner restaurants to commercial office properties and hotels. Mnuchin and Powell said that they were looking for ways to extend more help, but also that they were hitting legal and practical limits that might require action by Congress to avoid. Fed loans backed by commercial buildings as collateral, for example, were often prohibited by existing lending agreements that forbid the owners from further borrowing, Powell said. And proposals that the U.S. central bank loosen requirements for its Main Street Lending Program to make it more accessible to smaller firms, he said, overlooked the fact that larger businesses have been the ones interested in central bank credit. “There is very little demand below a million dollars,” Powell said in response to Mnuchin’s suggestion that the minimum loan size under the facility could be lowered from $250,000 to $100,000. Help for small businesses, Powell said, would better come through another grant-type program like the Paycheck Protection Program because “trying to underwrite the credit of hundreds of thousands of small businesses would be very difficult,” for the Fed.