Wall Street tells Trump financial system strong, ready to support borrowers
The U.S. banking industry is strong and ready to help businesses and consumers weather economic fallout from the fast-spreading coronavirus, Wall Street chief executives told President Donald Trump during a meeting at the White House on Wednesday.
“This is not a financial crisis. The banks and the financial system are in sound shape and we are here to help,” said Michael Corbat, chief executive of Citigroup (C.N), during the meeting, which was broadcast from the White House Cabinet Room.
“We want to provide liquidity, we want to lend to our small businesses, we want to be supporting our consumer clients,” he added.
The Trump administration in recent days has tapped regulators to assess financial resilience and unveiled a fiscal stimulus package in response to growing fears the spread of the highly contagious virus could push the U.S. economy into a recession.
Trump convened the executives on Wednesday to hear their views on the economy and proposed stimulus package, which includes potential tax relief, paid family leave and small business assistance. Parts of the plan will require Congressional approval.
“The first thing is to add that fiscal stimulus in the time of stress is absolutely the right answer … Keeping people who are unemployed or under-employed with cash flow and money is key,” said Brian Moynihan, CEO of Bank of America (BAC.N), adding the government needed to fix problems with the healthcare response to the virus, including by bolstering hospital capacity.
Uncertainty over whether a divided U.S. Senate would pass the administration’s stimulus package helped spur another sell-off on U.S. stock markets on Wednesday.
The Dow fell 5.85%, confirming a bear market for the first time since the 2008 financial crisis, as the World Health Organization called the coronavirus outbreak a pandemic. The S&P 500 .SPX lost 140.84 points, or 4.89%.
Chief executives from Wells Fargo & Co (WFC.N), Goldman Sachs Group Inc (GS.N), Truist Financial Corp (TFC.N) and U.S. Bancorp USB. were also in attendance, as was Gordon Smith, co-president and chief executive of JPMorgan Chase & Co’s (JPM.N) consumer and community banking division.
The executives spoke with Trump privately for just over 40 minutes before opening up the meeting to questions from reporters.
Trump took the opportunity to tease parts of the stimulus package which is expected to be unveiled in detail in coming days, including during his national address scheduled for Wednesday night.
“We’ll be doing a lot of additional work with small businesses, adding many billions of dollars and making lots of small business loans,” Trump said, adding “I think a payroll tax would be great … very good for the citizens, the people and longer-term for the country.”
U.S. banking regulators on Monday urged lenders to go easy on consumers and businesses who may have trouble repaying loans if coronavirus-related disruption causes businesses to lose revenue, close temporarily, or lay off staff.
On Wednesday, the executives discussed how they can make the most of that regulatory flexibility through measures such as loan repayment holidays, waiving some fees, and low or no-cost loans.
“All of our plans are designed to protect consumers and small businesses. We’ll be there with forbearance plans and we’ll be there to waive fees,” said Smith.
“Spending among the Millennial generation is holding up very well,” he said, adding that JPMorgan has lent consumers and small businesses more than $ 26 billion in the last 40 days.
Citi is also waiving monthly account fees and penalties on certificates of deposit for customers affected by the outbreak and Goldman Sachs plans to give customers of its online bank Marcus an extra month to make payments on personal loans without additional interest.
