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Posted: 2020-07-24T17:20:18Z | Updated: 2020-07-25T12:05:35Z

Big hotels , private equity firms and hedge funds are seeking a new government coronavirus bailout, and more than 100 members of Congress from both parties are taking up their cause.

Hotels and major institutional investors are already eligible for an array of emergency government funding programs, from the small business-focused Paycheck Protection Program to the Federal Reserves multitrillion-dollar corporate bond-buying program. But a behind-the-scenes lobbying effort could persuade Congress to funnel even more money to these firms, with fewer strings attached.

At issue are specialty investments known as commercial mortgage-backed securities, or CMBS. Similar in design to the mortgage bonds that crashed the economy in 2008, CMBS pool real estate loans from businesses and then sell pieces of the deal to institutional investors.

As the coronavirus pandemic has crushed demand for hotel rooms, these loans now face a wave of defaults. Hotel owners like CMBS deals because they offer lower interest rates than other lending arrangements, but those cheaper rates come at a price. Most CMBS deals require stricter repayment terms with more limited flexibility than traditional bank loans. If a hotel gets into trouble on a CMBS loan, its designed to be very difficult to cut them a break.

Now hotel owners are loudly complaining that their payments are unaffordable. They include some of the most powerful voices in Washington: hedge funds, private equity firms and other major institutional investors.

Only a few months ago, almost no lawmaker on Capitol Hill knew what the acronym CMBS stood for, lobbyist William Chip Rogers, president of the American Hotel and Lodging Association, boasted in a podcast interview Wednesday. Today, dozens are pushing to bail them out.

In fact, we have a letter that we created that well over 100 members of Congress signed to send to the Treasury Democrats and Republicans alike asking them to help solve this problem, Rogers said in an interview with Rupesh Patel , a Florida hotel owner and industry analyst.

The thoroughly bipartisan letter , sent to Treasury Secretary Steve Mnuchin and Federal Reserve Chair Jerome Powell in June, warned that if the CMBS crisis goes unchecked, it may lead to a wave of foreclosures, exacerbating the current downturn in the U.S. economy and ultimately result in permanent job loss in multiple industries and communities across the country.

The letter did not specifically mention hotels but asked the Federal Reserve to create a relief plan for these borrowers on top of the relief plans that Congress has already created for businesses big and small.

To put it more precisely: Hotels and investors that agreed to a specific risky type of loan are now asking for a specific generous government rescue. And the lobbying organization may or may not have actually written the letter that purported to be from members of Congress.

Congress will likely pass one more major coronavirus relief package before going on its August recess. Senate Republicans plan to introduce their opening bid next week, just as eviction protections and expanded unemployment benefits from earlier coronavirus bills expire.