CEO of Kairos Ankur Jain joined Yahoo Finance Live to break down what a bipartisan group pushing for renter stimulus means.
ADAM: We want to keep this discussion going on about how stimulus can help people. But something that could be done, which seems like an ingenious idea to help us get an idea of what we are discussing. It's about helping renters who are on a cliff about to be evicted at the end of the year, and Ankur Jain, the CEO of Kairos, he's here after an Op Ed, in which you are one of the co-authors, proposed taking the down payment, essentially, the security deposit that lots of people pay when they rent an apartment. And allowing people to use that to buy insurance to protect the landlord. Tell us more about how this would solve a problem at both ends.
ANKUR JAIN: Yes. I mean, Adam, look, it's only Monday and it's been a tough week already with these shutdowns spreading throughout the country again. And one of the big consequences of these continued shutdowns is that more and more people are now getting out of work again right as Congress has failed to pass any additional stimulus. And rent payments are coming up and the rent eviction moratorium is ending.
And so if we don't figure out a way to get cash back in people's pockets, we risk a slew of millions of Americans who could lose their homes come January. And so we've been thinking about what we could do, just common sense ways to put money back into people's pockets without help from the federal government. And one of the areas we've been looking, to your point, was this $45 billion of cash that renters have locked away in their rental security deposits.
So when you rent an apartment, they take $1,000, $2,000 and have that locked away. But we've been working on his new proposal with Republicans and Democratic leaders at the city and state levels to say, hey, what if we gave renters a way to get that money back? What if they could say to their landlord, hey look, I'll replace that deposit with something like a deposit insurance that's $3, $4, or $5 a month, but still protects you in case any damage has happened. And you give me back that money so I can make next month's rent payment or pay down my student loans. And if we can do that, we can get $45 billion dollars back into the economy without help from the federal government.
- I was reading your Op Ed and it looks like Atlanta and Cincinnati have been two cities that have implemented this type of strategy. What have those cities learned and are these cities-- are they examples, are they two cities that have this rent crisis figured out at this point?
ANKUR JAIN: Yes. I mean, look, this isn't a this isn't a solution to the long term problem. I mean, we have to get people back to work. The amount of money needed to keep people going for the next three, four, five, six months is going to take much more than just a single stimulus check. But the challenge we're dealing with right now is more of an immediate issue, which is, how do people pay rent now? How are people going to make their next rent payment to avoid eviction?
And I think that's where this has made a huge difference. And again, we've seen that in Cincinnati, we've seen that in Atlanta. By the way, Governor Cuomo also passed this as an executive order in New York City. And so just giving that money back-- we can put that into context, guys. The average check we can receive through the Trenta stimulus is about $1,400 dollars.
The federal stimulus checks were less than that. So we can put that money back and make a pretty big difference in people's pockets as an interim solution, while we wait for something broader to get passed at the federal level.
ADAM: So who sells this insurance? Are these kind of set up through government entities the way we have the insurance programs at the state level with insurance companies on annuities, that kind of thing?
ANKUR JAIN: So these types of innovations have been coming out for the last three years. We've been backing and supporting innovations like this at Kairos for years now. Just ways to create more affordable housing access. And so you have products like Rhino and others in the market that have been doing this now for the last few years. And I know, for example, with Rhino, I think, there's been over $200 million dollars given back to renters just using that insurance program.
What this policy does is it's another example of a public private partnership, which I think we've thankfully seen a lot of during this pandemic where these private sector innovations exist, but with the help of policy makers, everyone can get access to it. And so that's the kind of innovation that we're looking to bring with something like this over the next hopefully one, two weeks so people have relief before the end of the year.
- The housing crisis that we're facing right now, is this like anything we've seen in the past? I know a lot of people have drawn similarities between 2008, 2009. Obviously very different circumstances, but is this like anything we've seen historically?
ANKUR JAIN: So 2008, 2009 hit homeowners in a hard way. I think what's unique about this is the impact you're having on renters. Because renters now are facing not just these high-- we had a record high rent market going into the pandemic. You had record low savings, and now coming into December, you've got this eviction moratorium expiring.
So starting in January, the backlog of rent that hasn't been paid is going to start to result in evictions. We've never seen anything like that before. And I don't think anybody on either side of the aisle wants to see millions of Americans being thrown out of their apartments. And so that's the solution we've just got to figure out in the next, I mean, really, 14 days.
ADAM: Doesn't sound like there's going to be a solution in 14 days. I mean, what's going to happen to people?
ANKUR JAIN: But I mean, Adam, I can tell you right now this is happening across the country. So because of private innovations like this already that are available to renters across the country-- like I said that over $200 millions dollars I know at Rhino have already been put back into people's pockets in just the past few months. And this policy effort is just again, scaling that up.
So when New York City-- New York State Governor, Cuomo, authorizes executive order, you suddenly had $8 billion dollars that's now available in New York state alone. And so this is the kind of thing that can help get the next month's rent payment passed without having to wait. I mean, even if the federal government, if we did get something passed, it'll take 30 plus days for that money to flow back into people's pockets.
Here the money's already with your landlord. So you can use it to cover next month's rent, while still keeping them protected.
ADAM: Ankur Jain, the CEO of Kairos, we appreciate your being here and we wish the best to a lot of people who are in a very dire situation.