Peter Solomon, PJ Solomon founder and chairman, joins Yahoo Finance's Jen Rogers to today's market action amid the coronavirus pandemic and the latest stimulus bill vote to fail in Congress.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance Live. I'm Jen Rogers. Another sell-off here on Wall Street, we're also waiting for news out of Washington DC on any movement on stimulus. Right now, we want to bring in Peter Solomon. He's an investment banker, chairman and founder of PJ Solomon. It's an investment bank with deep knowledge and relationships in American retail. He's also a former New York City deputy mayor for economic policy and development. Peter, you've also worked in the Treasury Department.

So you come at this from a lot of different angles, but I want to start with retail because that is where you have spent a lot of your career. Are these big retailers, not Walmart and Amazon, but kind of the next area down, are they going to make it out of this?

PETER SOLOMON: If they-- there's going to be a generalized crushing of retailers in America. There will be a considerable number of bankruptcies because a number of retailers do have leverage. You cannot stop demand, as we've just stopped in the country, and have these guys survive. They pay rent. They pay interest. They pay their workers. They're going to have to stop paying their workers in a couple of weeks. I don't think they can get by. Most of them can't afford to keep workers on with stores closed. So you're going to see considerable number of bankruptcies.

The retail was under pressure-- when you talk retailing, you're talking about department stores. You're talking about discount stores. You're talking about apparel stores, basically. A lot of other retailers will do fine. Best Buy's doing well. There'll be hard goods retailers that do well. But when most people talk about a retailer, they're talking about apparel. They're talking about shoe companies. They're talking about department stores. That landscape was always under-- already under enormous pressure. This will kill it.

JEN ROGERS: So is there a risk then, with that, of this becoming more of a financial crisis? If it's going to be debt issues, are you also worried about the knock-on effects of these retailers?

PETER SOLOMON: Of course. What's happened in this is really-- one of the most interesting things is the failure of the government here. We have a lot of history in the government, even, as you say, within New York City alone of dealing with crises and how you have to deal with them. And this has been a massive failure of the executive branch and the Congress, I might add.

You know, I'm going to jump a little here. But when the Congress starts talking about bailouts and the Democrats, of which I am one, start talking about bailouts, we're actually bailing out the American government right now. The American government caused this problem by not being prepared for it. I mean, the government government's job is to protect you from war, pestilence, and famine. That's what their job is, and they failed. And it doesn't mean this administration, but this is the administration, and it also means the Congress. So there's going to be enormous damage here.

So we've gone from a health care crisis to an economic crisis. And as you know, most companies in America have hit their credit lines in the last day or two. So without dramatic action by the Fed, which you're hearing about and we've sort of taken, you will now have a financial crisis. Now incidentally, there'd be a worse financial crisis if the banks and the administration had reduced capital requirements. The only reason we don't have a financial crisis at this very moment is that the banks had they-- had to put in so much capital on the Basel III over the last six to eight years. Long-winded answer but that's in the nutshell.

MYLES UDLAND: You know, and so Peter, you talk about this financial crisis and the failure of Congress, and we started with the retail sector that's going to be under pressure. I guess my question is, I mean, is it-- shouldn't we be bailing out these companies if it's an artificial crisis, in a sense? I mean--

PETER SOLOMON: You shouldn't use the word bailing out. That's your mistake. And you're using it, and everybody in the media is using it. There is no-- there's no bailout. What's going on here is the United States government, for the first time in history, has, as a fiat, cut demand. The only other time in history we cut demand was during the war, but we said, you can't buy consumer goods. We don't want you to manufacture cars. We want you to manufacture tanks. So we substituted one form of demand for another form of demand. Here, we cut off demand. We cut off demand on behalf of a health care crisis, which was a-- I guess a good judgment. But you're not bailing out people.

JEN ROGERS: So do you see-- we have this stimulus bill, second time now that we've failed to get it to go up for a vote.

PETER SOLOMON: Yeah, and I have it in my hand. It's pathetic.

JEN ROGERS: Do you have-- I mean, do you have any hope here that the-- let's say the stimulus comes out and it's huge and it's bipartisan. We can we turn this around still?

PETER SOLOMON: Yeah, I think so, but it's a near run-- it's a close race. It seems to me that you have to get people back to work. You have to get them out of their homes. I just spoke to a good friend of mine in Helena, Montana. He's told to stay home. Now, I don't know how many jobs are in Helena-- I mean, how many people are diseased in Helena, Montana. So the health care folks want everybody to stay at home, and the economic folks want people to get out to work as soon as possible. So that is the tension.

But there's going to be a time that we make a decision of, is it 15 days? Is it 30 days? Because if it's 60 days from now and everybody America is in their home, we don't have models to calculate the cost of that. We simply don't have models. You can't keep people in America not working for 60 days and come out of it in any way, shape, or form, I don't think. So we've got to get people back to work.

JEN ROGERS: Peter, besides working with big retail when you were at an investment bank, when you were working for the New York City deputy mayor role that you had, you had more-- some small business visibility. We have a restaurateur that's going to be on in the next hour, Tom Colicchio, who is saying that he sees, you know, 70% to 80% of restaurants not coming back. What do you think the picture for small business in America is?

PETER SOLOMON: First thing--

JEN ROGERS: Is it bleaker or better than big?

PETER SOLOMON: Firstly, I have a lot of experience with small businesses since I started one, right? And I ran one. So it's not only in the private sector but the public sector. Of course, most businesses, if they stay out of business long enough, will not come back.

Let me give you an example, and we have experience in this. We had two blackouts in New York City, one in 1965 and one in 1977. In 1977, half the-- almost all retailers on 1st and 3rd Avenue in East Harlem were wiped out. By the time they got the compensation from the feds and the city three or four years later, they were out of business. So you have to get these guys compensation. You have to get them money immediately, or they will not be-- they will not come back.

JEN ROGERS: So what is the timeline here, you think, for this country right now and the economy?

PETER SOLOMON: 30 days.

JEN ROGERS: 30 days?

PETER SOLOMON: Yeah. I think you got to get a lot of this country back in 30 days. And if we didn't have a health care crisis, if we weren't worried about, as I am, ventilators-- as a senior citizen, what's my-- I have two worries right now, one real worry, and the word is triage. As a senior citizen, triage is a very important number, and that triage depends on the number of ventilators in the country.

So if we-- we have a health care crisis, and we've got to nail that. But we-- somebody's then got to make a decision of where we just say to people, we know what's going on here. You've got to take a risk in certain states to go back to work. It may not be New York, probably won't be. It may not be California or Washington. But we've got to get the country back to work at some time.

JEN ROGERS: Peter Solomon is the chairman and founder of PJ Solomon. Thank you so much for your time.

PETER SOLOMON: Thank you, Jen.