April 27, 2020
Orion’s Account Executives are “in the trenches” working with our broker clients on helping them refinance their borrower’s existing mortgages or helping new clients buy a home. (Yes, there are transactions taking place.) On a national level, Orion believes it is important for brokers to know what is going on with the economy, and why the Federal Reserve decided to “add liquidity” to the markets.
Earlier this month the Federal Reserve announced programs that can provide $2.3 trillion in loans and liquidity for businesses, states, municipalities, and other corners of the market. Of the total, $600B will be for business loans originated through banks, $500B is dedicated to purchasing short-term notes from states and certain municipalities, $750B will be used in corporate credit markets, $100B will be used for TALF (Term Asset-Backed Securities Loan Facility, established in March), and the remainder will be used for the Paycheck Protection Program (PPP) liquidity facility.
Everyone, including Orion’s management, was amazed with the speed and scope of the Federal Reserve’s response to the economic problems caused by the coronavirus. Market sentiment has improved. But what about individuals? And how about those checks?
The Phase 3 coronavirus stimulus payments have started, but there a long road ahead. The first batch of personal stimulus payments were sent to banks. Our brokers know that the $1,200 ($2,400 for married people filing their income tax jointly) money is “needs based.” There is a phaseout rate of 5% for adjusted gross income over $75,000 for singles/$112,500 for head of household/$150,000 for married filing jointly.
Experienced brokers know that the federal government’s role in financial markets is just beginning to ramp and we can expect it to be a pronounced and persistent force for years to come. The government’s role in markets tends to ebb and flow depending on the combination of economic factors and political realities, but given the economic fallout from coronavirus, the limited effectiveness of monetary policy at the zero bound, and deficit hawks being on the endangered species list in Washington, we appear to be entering a new phase of our political economy.
Orion is continuing to monitor these events, and their impact on our brokers, daily. Even hourly. And we’re continuing to offer products and pricing that help our borrowers, regardless of what happens with the U.S. economy.