The Afternoon Audit
Tuesday | 4.21.2020

What Happened Today

Global Markets Finish in the Red

• DOW -2.67% | NASDAQ -3.48% | S&P 500 -3.07%

Catch Up Quick

• President Trump says he plans to temporarily suspend all immigration to the U.S. through an executive order

• Short sellers' bets that the stock market will fall have been raised to their highest level since 2016

• A number of states are asking the federal government for interest-free loans to cover unemployment payments

• Restaurants are turning into grocery stores and wholesalers and supermarket chains are functioning as grocery deliverers as they adapt to America's new lifestyle

  • Subway, Panera Bread and Moe's Southwest Grill are among the chains that have started selling bags full of their own ingredients — like fresh produce and bread

The Dangers of Governmental Infrastructure Obsoletion

Small Businesses Upset With Paycheck Protection Program

• A class-action lawsuit developed by owners of small businesses claims JPMorgan, Bank of America, Wells Fargo and US Bank prioritized larger loan applications over smaller ones in order to collect processing fees

Government Infrastructure is Outdated

• In a previous write-up, I noted the government's disconnect with the technology sector

• Despite a boom in payment platforms such as PayPal, Stripe, Venmo, among others, the government hasn't updated their transaction technology in decades

• The only way for the government to disseminate funds is by pumping money into the big banks for them to then distribute according to an application process, wire transfers, and account deposit

This is Causing Huge Issues

• The government can’t help or reach main street without going through Wall Street

• Adding the big banks as a middle man between individuals / small businesses and government funding creates an unnecessary bottleneck, as tens of thousand applications must be processed by a handful of individual financial institutions

• Furthermore, the big banks realize processing fees proportional to the size of the funds they distribute

  • Larger companies have greater capital needs and therefore, the PPP system incentivizes banks to process and deliver funds to larger companies who have a much higher chance of surviving the pandemic than smaller companies

• Hundreds of millions of dollars have gone to companies with market caps over $100M, some publicly traded. How many small businesses do you think that money could have helped?

The Bottom Line

• It’s time for an infrastructure revamp

• The government needs a way to reach individuals and small businesses without having to go through Wall Street

• This would be a relatively easy, inexpensive, updated, more scalable way to help small businesses who desperately need the money