Lazard CEO Sees Second Wave of Crisis Led by Cash-Strapped Firms

(Bloomberg) -- Lazard Ltd. Chief Executive Officer Ken Jacobs, whose firm is working on some of the largest restructurings in the world, sees more trouble ahead even as economies begin to reopen.

“The second wave likely starts sometime this summer for the companies that don't have enough money to make it through,” Jacobs said this week in an interview.

Jacobs follows his deputy, Peter Orszag, who warned that there could be cascading bankruptcies if the U.S. government didn't step up with a more sweeping stimulus. President Donald Trump's administration is planning a $1 trillion relief package, people familiar with the matter said. That amounts to about a third of the size of the previous round.

The White House and Congress have been consumed with nationwide protests against police brutality after the death of George Floyd, a black man in Minneapolis. It's unclear how quickly a stimulus package can be passed as job cuts across America mount by the millions.

With 40 million Americans filing for unemployment, “it really starts to infect the rest of the economy and its ability to recover,” Jacobs said. White-collar jobs are the next to be affected, according to a Bloomberg analysis.

Wall Street leaders including JPMorgan Chase & Co. CEO Jamie Dimon and Goldman Sachs Group Inc. President John Waldron have voiced concerns about the potential for an economic rebound.

“I just don't believe we're going to have a light switch,” in which the economy just turns back on as businesses re-open, Jacobs said.

Read more: Trump team envisions up to $1 trillion for stimulus

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