The Forum’s COVID Update: Issue 5

9 Jul 2020

“Well Positioned to Cushion the Financial Shocks”

The results of the Federal Reserve Board’s 2020 stress tests underscored the strength, safety and resiliency of the nation’s largest banks, which have again proven that they can absorb losses and continue to support U.S. businesses and consumers during a time of severe financial stress.

In the midst of the COVID pandemic, Forum members have not only weathered the initial economic shocks, they have stepped up to assist customers with relief programs, supported businesses by increasing lending by 15% in Q1 and providing more than 773,000 Paycheck Protection Program (PPP) loans, and they have committed over $2 billion in charitable donations to communities in need.

As Federal Reserve Chair Powell recently said in testimony before Congress: “Unlike the 2008 financial crisis, banks entered this period with substantial capital and liquidity buffers and improved risk-management and operational resiliency. As a result, they have been well positioned to cushion the financial shocks we are seeing

The size and diversification of our institutions make them stronger, more stable and better able to lend and support the economy throughout this period of economic uncertainty. There are undoubtedly more challenges ahead, but after years of building resiliency, Forum members remain confidently poised to support the response to this crisis and our eventual recovery.

Forum Spotlight: JPMorgan Chase – A Resiliency Case Study

JPMorgan Chase, like other Forum members, has prioritized resiliency and fortress balance sheets for years, helping the bank to enter the crisis from a position of strength. This allowed the bank to quickly step up and provide significant resources and support through the crisis to clients, employees and the community at large.

JPMorgan Chase helped financially-struggling customers with payment deferrals and fee refunds on more than 2 million accounts. The bank quickly put capital to work to help business clients secure more than $45 billion in new credit, and $950 million in new loans for small businesses. Corporate clients raised hundreds of billions in capital, including those in hard hit industries like healthcare, travel and transportation financing, helping them to save jobs and continue to provide the goods and services upon which we all rely.

The bank has committed $250 million to support the recovery of vulnerable and underrepresented communities and small businesses and gave essential workers a $1,000 special payment, while continuing to pay those employees who were higher risk and unable to be on-site. And significant investments in technology prior to the pandemic provided JPMorgan Chase with the ability to quickly and seamlessly transition about 70,000 U.S. employees to seamlessly work from home within only weeks.

This comprehensive approach to pandemic response – spanning clients, employees and community – is possible because of years of planning and a commitment to the obligation of large financial institutions to support the economy across all cycles. (More from JPMorgan Chase)

Lifting Businesses on Main Street

During this unprecedented global pandemic, Forum member firms have worked to help American small businesses, the engines of our economy, stay afloat. They are offering loans and new lines of credit to small business clients, as well as actively participating in the Small Business Administration’s Paycheck Protection Program, which was recently extended by Congress. 

As of mid-June, Forum banks have made or approved more than 773,000 PPP loans to small businesses, totaling nearly $70 billion. More than half of the loans (55 percent) by Forum members are for small businesses with four employees or less. And nearly half (49 percent) of the loans are for less than $25,000 and nearly 80 percent are for less than $100,000.

The Forum firms participating in the PPP have committed to using net proceeds to support the small businesses, communities, and nonprofits they serve. Citi, for example, has donated $25 million in initial proceeds from PPP to the Citi Foundation, which is deploying $15 million in unrestricted funding of up to $500,000 per Community Development Financial Institutions (CDFI) to support small businesses owned by people of color and low- and moderate-income individuals and communities. (More on Forum Member COVID-19 Efforts)

Forum Spotlight: Morgan Stanley Partners with National Urban League to Expand Financial Inclusion

Morgan Stanley has announced $10 million in grants to support the National Urban League (NUL) and expand a number of critical initiatives in communities where the Urban League operates. The funds will support the following initiatives:

  • Infrastructure support for NUL’s Urban Empowerment Fund, credit union and NUL’s financial literacy and homeowner counseling programs.
  • In NULs Workforce Development Program with an emphasis on technology programs that help close the digital divide by expanding broadband access for communities and households that lack affordable highspeed internet.
  • A four-year internship program in NUL’s Office of the President to provide rising leaders the opportunity to work alongside NUL’s executive management.

“We are excited to have Morgan Stanley’s support to strengthen our highly impactful economic empowerment initiatives, which advance our relentless efforts to close the racial wealth gap in America,” said Marc H. Morial, President and CEO of the National Urban League.

This effort builds on Morgan Stanley’s existing commitments to support communities grappling with the economic and health crisis in the wake of the COVID-19 pandemic, including $10 million in grants for Minority Depository Institutions (MDIs), a $10 million investment to support the New York Forward Loan Fund, and $25 million in grants to support the ongoing relief efforts to the global COVID-19 crisis. (More from Morgan Stanley)