Wall Street tells Trump financial system is strong despite virus

The United States 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, during the meeting, which was broadcast from the White House Cabinet Room.

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“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 contagious virus could push the US economy into a recession.

Trump convened the executives on Wednesday to hear their views on the economy and proposed a stimulus package, which includes potential tax relief, paid family leave, and small business assistance. The plan must be approved by Congress.

“The first thing is, to add fiscal stimulus in the time of stress is absolutely the right answer. Keeping people who are unemployed or underemployed with cash flow and money is key,” said Brian Moynihan, CEO of Bank of America. He added the government needs to fix problems with the healthcare response to the virus, including by bolstering hospital capacity.

Uncertainty over whether a divided US Senate would pass the administration’s stimulus package helped spur another selloff on US stock markets on Wednesday.

The Dow fell 5.85 percent, 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 lost 140.84 points, or 4.89 percent.

Chief executives from Wells Fargo & Co, Goldman Sachs Group Inc, Truist Financial Corp and US Bancorp were also in attendance, as was Gordon Smith, co-president and chief executive of JPMorgan Chase & Co’s consumer and community banking division.

US banking regulators on Monday urged lenders to go easy on consumers and businesses who may have trouble repaying loans if coronavirus-related disruption causes companies to lose revenue, close temporarily, or lay off staff.

On Wednesday, the executives discussed how they could 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 $26bn in the last 40 days.

Citi is also waiving monthly account fees, and penalties on certificates of deposit for customers affected by the outbreak, while Goldman Sachs plans to give customers of its online bank Marcus an extra month to make payments on personal loans without additional interest.