‘THIS TIME IS DIFFERENT’
April 6, 2020

The U.S. banks have much stronger balance sheets than they did during the 2008 financial crisis. The Federal Government has responded to the COVID-19 impact quickly and with incredible measures giving financial institutions a significant cash reserve to be deployed and assist in the overall recovery of the country.

Here are the key messages that Daniel Kodsi, CEO of Participant Capital and RPC, addressed during his exclusive online presentation for Financial Advisors on April 2, 2020. His development company RPC has weathered multiple economic cycles over its 40-year history and in his view, the overall impact the Coronavirus is having on markets is not the same as the 2008 financial crisis.

“This time is different. The U.S. Banks have much stronger balance sheets than they did during the financial crisis. They are healthy and flush with cash. Institutional lenders were virtually non-existent in 2008, whereas, in the past five years, they have raised billions in debt that needs to be placed. Moreover, loan to value ratios on mortgaged homes is significantly lower today and oversupply in the market is low. In 2008, we had too many residential, office, retail, and hotel products. Today’s market is driven by demand,” said Daniel Kodsi. He also added that construction in Miami has not stopped and most companies will work through this with best practices for their employees.

Participant Capital – Navigating Investments during COVID-19 and its Disruptive Effects (ENG, CC) from Participant Capital on Vimeo.

In the wake of the COVID-19 crisis, the Federal Government has been quick to provide a historic $2.2 trillion boost to the U.S. economy. This massive stimulus package aims to infuse cash into individual and small business accounts to ease the brunt of the economic setback brought on by the Coronavirus. Currently, there is $350B in loans available to small businesses to pay employees, mortgage interest, rent, and utility costs.

“Congress has moved forward with programs that they learned can work from 2008. They know how we can jumpstart the economy and ensure that people do not lose their jobs. Congress is prepared to pass another stimulus package if needed and review regulations and other things that may inhibit full economic recovery,” continues U.S. Senator Jeff Flake, who also joined the online webcast from his house in Arizona.

“In the meantime, the Treasury and the Federal Reserve have significant flexibility to respond as we go forward. Hopefully, the impact of this pandemic will be brief, not minimizing what will happen in the next couple of weeks or next two months. It will be significant and tough to watch, but with regard to the economy, we will come back. Nobody has ever won by betting against the United States. We have always done well. We will continue to do so,” concluded Jeff Flake.

The Spanish version is available here. / The Portuguese version is available here.

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