The Forum’s COVID Update: Issue #2

14 May 2020

Strong, Resilient and Supporting the Response

As our nation continues to endure the ongoing pandemic – physically apart but united in resolve – America’s largest banks remain focused on supporting the wellbeing of the individuals, families, businesses, employees and communities that we serve.

Our members entered this crisis stronger and more resilient than ever, enhancing their ability to respond to the crisis and support impacted Americans. During the first quarter of 2020, Forum members increased their lending roughly $272 billion to businesses of all sizes to help them remain viable. And, Forum firms’ deposit base increased by over 13 percent in Q1, as they continue to offer a critical financial service for businesses and households throughout the country.

In its recent regular Supervision and Regulation report, the Federal Reserve noted the actions taken by banking regulators and the industry in the past decade put the sector in a strong position to facilitate continued lending.

Banks are better capitalized and hold more liquidity,” the Federal Reserve said. “The industry is characterized by better capital and liquidity planning and improved risk-management capabilities at banks of all sizes.”

The central bank also noted that market-based indicators, such as the market leverage ratio and credit default swap spreads, “may reflect the belief by investors that banks are more resilient and better positioned today than during the 2008 financial crisis.”

There’s no doubt that the path ahead will be challenging. But banks are positioned to keep providing robust support to the economy. – Kevin Fromer, Forum President & CEO (More on the Banknotes Blog)

Forum Spotlight: Bank of America Commits $350 Million to Support Nonprofits and Communities, $250 Million for Community Lending

In March, Bank of America announced a $100 million philanthropic commitment to help tackle pressing health and humanitarian issues facing populations most vulnerable to the coronavirus crisis. The commitment is in addition to the bank’s $250 million annual philanthropic commitment. The majority of the funds are being distributed at the local level.

As of May 6, the bank has delivered over $90 million to more than 1,300 nonprofits around the world. Additionally, Bank of America is providing $250 million in capital to Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs), offering financial assistance to low- and moderate-income, and minority communities.

As part of its commitment, Howard University and Bank of America announced the opening of a free coronavirus testing clinic in Washington, D.C.’s Ward 7. The clinic, which opened on May 6, was made possible by a $1 million grant from the bank, and was lauded by D.C. Mayor Muriel Bowser who said: “Not only is this site providing free testing, but it is also equipping residents with the information they need to protect themselves and their families from COVID-19. Together, this is how we save lives and ensure all residents are getting the care they need during these unprecedented and uncertain times.” (More from Bank of America)

Forum Analysis: Banks of All Sizes are Supporting Small Businesses

The Paycheck Protection Program (PPP) has been one of the government’s key policies aimed at supporting small businesses and workers impacted by COVID-19. Banks have served as conduits for this assistance, devoting significant staff and technology to the federal government’s lending program.  With any program of this magnitude and importance, there is interest in how the funding is disbursed and to whom. Small businesses bank with financial institutions small and large, and accordingly, supporting small businesses requires leveraging the entire banking system.

Our findings show that banks of all sizes have played an important role in channeling relief to households and businesses through the PPP program. Looking at the total amount of PPP lending in each state and the number of branches for community, medium and large banks, we see a positive relationship indicating that states with more branches, of banks of all sizes, receive more PPP loans.

The number of bank branches is a good proxy for the relationship between banks and small businesses, as well as the availability of local bank staff to answer PPP-related questions and process applications.  Our research shows that as a whole, the banking system is doing its part to support households and businesses through these difficult times and will be ready to further support the economy in the recovery. – Sean Campbell, Forum Chief Economist, Head of Policy Research (More on the Banknotes Blog)

Forum Spotlight: JPMorgan Chase Customers Benefiting from PPP

As of May 5, Forum institutions made or approved more than 700,000 PPP loans to small businesses, totaling nearly $73 billion. But what do these big numbers mean to a small business struggling during this pandemic?

The vast majority of PPP loans from Forum member JPMorgan Chase have gone to some of America’s smaller businesses, including Community Wellness Ventures, a mental health services company that serves children and families in Washington, D.C. Their PPP loan is helping Dr. Charlayne Hayling-Williams and her husband, Dr. Rod Williams, continue to pay their counselors, social workers, psychologists and housing specialists.  

“I own two restaurants in New York City which have been completely shuttered,” said Paula Vargas, proprietor of family-owned El Coyote Restaurant. “I did not apply initially because my father and brother were in the hospital with the Coronavirus, battling for their lives. Chase not only helped me every step of the way with the application process, but did so at any time of the day or night. This loan will be able to put us back on the market and provide relief for our 60 employees and their families.” (More on our Coronavirus Response page)