The official unemployment rate declined to 11.1% in June from 13.3% in May while total unemployment rate dropped to 18% from 21.2%. Permanent job losses increased 7% on the month. The degree of misclassifications has “declined considerably” and would have contributed only 1% to the total rate. Initial jobless claims for the week ending June 27 shows another 1.4 million Americans filed for unemployment insurance for the first time. This metric has remained stubbornly high, averaging 1.5 million over the past 4 weeks.
Since the onset of the COVID-19 pandemic in the U.S., over 44 million Americans have filed for unemployment. To help consumers bridge this temporary period of financial hardship, lenders, with the support of federal and state regulators, have provided borrowers with a myriad of payment relief plans.
Given the size and scope of COVID-19 relief programs, combined with more powerful oversight authorities in the CARES Act, we expect congressional oversight of COVID-19 related issues to become a high priority for Congress for both the remainder of this year and beyond as the economy recovers from the effects of the pandemic.
While the fight against COVID-19 rightfully demands the attention of our industry, it is important we not lose sight of the transition away from LIBOR. At the Structured Finance Association, we are helping manage this transition and today launch a series of LIBOR pieces by our in-house industry experts.
The president signed the Paycheck Protection Program and Healthcare Enhancement Act after the House passed the bill by a margin of 388-5 on April 23 and the Senate passed the bill by unanimous consent on April 21. The $484 billion package provided funding for the Small Business Association’s Paycheck Protection Program, as well as for hospitals and COVID-19 testing.
Ginnie Mae recently announced that it would create a liquidity facility of last resort, and on Monday provided further guidance to industry participants on how the Pass Through Assistance Program for COVID-19 (PTAP/C19) will operate. Ginnie Mae ‘s PTAP/C19 is the first—and to date, only—Federal liquidity facility for mortgage servicers.
Extraordinary times call for extraordinary measures. And the Fed continues to respond appropriately. On April 9, the Federal Reserve once again drew on its full range of authorities to expand and establish lending facilities to provide up to $2.3 trillion in loans to stabilize households, communities and businesses of all sizes during the pandemic crisis and to “ensure that the eventual recovery is as vigorous as possible”.