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I’m not well versed in economics or law by any stretch of the imagination. But I am confused with certain measures taken thus far by the government.

There is currently a temporary shutdown of vast sectors of the economy now and workers affected are not receiving any income.

To me, logic would dictate that here should also be a temporary cessation of payments for rental properties (for small businesses as well as individuals) and, to be fair, a temporary cessation of payments for loans for owners of those properties. In turn, banks would be given temporary cessation payments for interest to its customers since the banks would not receive any payments on loans including payments on mortgages from homeowners. That would essentially close the loop on money flow which again would be temporary and the impact to the greater economy would be limited.

If undue burden is placed on any one of these points in the cycle, and right now, workers and small businesses are taking that brunt, then there could be long-standing damage to the economy from bankruptcies, foreclosures, etc.

The Fed is already addressing the banking side of things by keeping rates close to 0.

Does the government have the authority to push for a standstill in mortgage/interest/rent payments? I feel this temporary measure would alleviate economic hardship and prevent long-term damage to the economy.

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    Mortgage, loan and rental contracts only have any power because the courts will enforce them - if the borrower / tenant quits paying, the lender / landlord can sue and get a court order for foreclosure / levying assets / eviction. The government can, in principle, limit the power of the courts to do that, which would effectively void or suspend those contracts. Much of this is covered under state law, though, so it would be the state governments that would have to act.
    – Nate Eldredge
    Apr 18, 2020 at 1:16
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    Which government?
    – Greendrake
    Apr 18, 2020 at 2:56
  • That's not without its precedents. Read "Debt of Honor" by Tom Clancy vis-a-vis the Wall Street stuff. However, for citizens this is effectively happening; there's a stay on evictions many places. Stay on evictions realistically means can stay without paying rent. You will have to catch it up before the stay ends, of course. Once you've caught it up, the landlord has no standing to evict you for non-payment of rent. Of course, after the restrictions and lease end, they can end your tenancy for any reason or no reason at all, unless you're in rent control.
    – Harper - Reinstate Monica
    Apr 18, 2020 at 21:55
  • The problem with any stay of rent and mortgage payments such as suggested in your question is that it assumes its a zero sum game - the renter can skip payments and the landlord isnt hurt because they can skip mortgage payments. Except it badly hurts landlords who dont have mortgage payments to make, but instead rely on rent payments for day to day income - they get nothing and gain no benefit.
    – user28517
    Apr 18, 2020 at 22:08
  • And to add to my above comment, it also doesnt remove the obligations of the landlord to the tenant - in many cases, the landlord is required to make repairs or replace white goods etc which they now have to do for no income.
    – user28517
    Apr 18, 2020 at 22:10

2 Answers 2

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It depends on the applicable state laws granting emergency powers. The most recent decree in Washington State suspends garnishments and post-judgment interest. The governor was given broad powers by the legislature (RCW 43.06.220) to suspend laws in case of an emergency. If a state has no such powers (every state does) or if a particular action is not within the scope of the governor's emergency powers, then no. Otherwise yes. The governor of Washington has the emergency power to limit assembly, anything to do with flammables, sale of anything related to preservation of life, health and peace, and "other activities as he or she reasonably believes should be prohibited to help preserve and maintain life, health, property or the public peace". He also can suspend government enforcement actions, such as garnishment and post-judgment interest (and court proceedings resulting in judgments), an suspects statutory / regulatory restrictions on actions (could suspend the sales tax). He cannot, however, single-handedly write new laws. There is no existing provision that would allow cancellation of interest obligations, although the legislature has the power to restrict interest in various ways (such as the usury statutes). So without a new power being passed by the legislature, the answer is Washington is "no".

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The government? Yes

Which part of the government depends on exisiting law.

If a provision of an existing law grants the executive the power to do so than this can be done by executive order. If there is no such law, then the legislature can convene and make such a law - either granting the relief directly or empowering the executive to do so.

There is a risk in the US that such a law would require the government to compensate the owner of the property (land or capital) through the Fifth Amendment’s Takings or Just Compensation Clause: ‘‘nor shall private property be taken for public use without just compensation.’’ However, the courts have been reluctant to impose an obligation to compensate on the government particularly as here where it is done for health and safety reasons and it’s not clear that it has been taken for “public” use since private parties (the tenant and borrower) are the beneficiaries.

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