Trump to Meet Bank Executives Amid Market Turmoil - The New York Times

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Officials from JPMorgan, Bank of America and other institutions will gather Wednesday at the White House to discuss help for businesses.

Credit...Evan Vucci/Associated Press

As the markets rage and more businesses reel from the impact of the spreading coronavirus, President Trump plans to meet with officials from the nation’s banks at the White House on Wednesday afternoon.

The meeting, which is scheduled for 3, is expected to be attended by top executives of the biggest banks, including David Solomon, the chief executive of Goldman Sachs; Brian Moynihan, chief executive of Bank of America; Charles Scharf, the chief of Wells Fargo; Gordon Smith, the co-president and chief operating officer of JPMorgan Chase; and Michael Corbat, chief executive of Citigroup, according to bank officials who have been briefed on the plans.

Other attendees scheduled to be there include Rob Nichols, chief executive of the American Bankers Association, according to a person briefed on the matter; Andrew Cecere, chairman and chief executive officer of USBancorp; and Kelly King, chairman and chief of Truist, the new company formed by the union of BB&T and SunTrust banks.

The full agenda of the meeting, which Treasury Secretary Steven Mnuchin mentioned on Monday but had not yet been formally announced, is not clear. But Mr. Trump is expected to attend, and the bank executives are preparing to address questions on their views of the recent market volatility, the funding of small businesses and their own economic outlooks, according to some of the bank officials who have been briefed on the plans.

“We’ll be talking to them about what they can do to help small businesses and companies that are impacted,” Mr. Mnuchin said at a White House briefing on Monday.

Hundreds of businesses, small and big, have been hit by the coronavirus outbreak, which has so far infected more than 116,000 people in some 103 countries. Airlines have cut service, signaling that ticket sales are falling as the epidemic spreads. Restaurants, retailers and other small businesses are seeing fewer customers. Supply chains of manufacturing companies have been disrupted since the outbreak started in China — home to many factories that make products for American businesses.

Stocks went through more turbulence on Tuesday, after Monday’s enormous plunge. The S&P 500 rose nearly 5 percent, recouping more than half of Monday’s losses. Crude oil futures on the West Texas Intermediate market, the United States benchmark, were up more than 11 percent after a precipitous decline Monday on news that Saudi Arabia would boost production and slash prices.

Amid the market carnage, stock prices for banks, which have exposure to a wide array of companies and consumers that they lend to and undertake transactions for, have plunged, too.

Bank stocks have been clobbered because investors worry that their lending businesses will become less profitable as lower interest rates kick in, and because of fears that struggling companies could default on their loans. On March 3, the Federal Reserve slashed its policy rate by half a percentage point in an emergency move, and is expected to cut further in the coming months.

“You could see these bank stocks come under more pressure,” said Nathan Stovall, principal analyst at S&P Global Market Intelligence, in an interview Tuesday, though already “there is a pretty negative scenario priced in here.”

Many banks also have heavy exposure to the oil industry. After Saudi Arabia cut the price of oil this week, stocks of companies in the oil patch plummeted. Many investors expect that these companies, which typically borrow heavily to fund their operations, will struggle to sell their oil and pay off their loans. Banks including Bank of America and Wells Fargo have billions of dollars of loans in the energy industry. While these giant banks’ oil exposure is only a part of their vast lending portfolios, smaller banks have a greater share of their business tied up in energy loans.

But all the volatility has an upside for banks as well: At firms like Goldman, Citigroup, Bank of America and JPMorgan, the high volume of trading in recent weeks has created revenue opportunities as traders and salespeople work with clients to continually rebalance their portfolios of global stocks, bonds and currencies.

“Volumes across the board in kind of every asset that I deal with have been quite large over the past two weeks,” said Jen Roth, who runs Goldman’s currencies and emerging-markets business in the United States, in an interview last week.

On Tuesday, many of the bank executives planning to attend the White House meeting were still preparing what to say, said the bank officials briefed on the plans.

But one thing is clear: Even as banks take precautions to limit the spread of coronavirus among their employees and face potential losses, these financial institutions are, arguably, in much better health and better prepared for the turbulence than they were during the 2008 financial crisis, which led to multiple bank failures and distressed asset sales. New financial regulations put in place in the aftermath of that recession pared risk-taking and increased transparency into bank planning and operations, making them stronger entities.

“Capital is substantially higher and substantially better quality than it was 12 or 13 years ago,” said Daniel Tarullo, who was the Fed’s key architect of post-crisis bank oversight. But, Mr. Tarullo, who is now at Harvard University, said: “That’s not to say that there’s certainly enough capital for this particular kind of risk.”

While banking executives and veterans said they saw little need for government assistance to the industry, some said banks could instead play a crucial role in helping consumers. For instance, the former Goldman executive Gary Cohn said banks could allow strapped consumers, who are either ill or out of work because of canceled travel or events, to defer payments on their monthly credit-card or mortgage bills until they are able to return to work.

“I don’t think people are concerned about companies, per se,” said Mr. Cohn, Mr. Trump’s former National Economic Council director. “What they should be concerned about is individual workers.”

On Monday, the Fed and other regulators put out a statement — like the one it issues after hurricanes and other natural disasters — assuring banks that they could be flexible with customers affected by the coronavirus without worrying about supervisory backlash.

The agencies “encouraged financial institutions to meet the financial needs of customers and members affected by the coronavirus” and said that “prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.”

The National Federation of Independent Business, a major small-business association, said its members were not yet expressing concern over credit availability.

“The big risk right now is the unknown of how this will affect the economy,” said Holly Wade, the group’s director of research and policy analysis.

As they prepared to meet with Mr. Trump, some of the bank executives were also deciding how best to travel to Washington from New York and other cities given the growing public-health crisis.

  • Updated March 10, 2020

    • What is a coronavirus?

      It is a novel virus named for the crownlike spikes that protrude from its surface. The coronavirus can infect both animals and people and can cause a range of respiratory illnesses from the common cold to lung lesions and pneumonia.
    • How contagious is the virus?

      It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can travel through the air, enveloped in tiny respiratory droplets that are produced when a sick person breathes, talks, coughs or sneezes.
    • Where has the virus spread?

      The virus, which originated in Wuhan, China, has sickened more than 124,000 in at least 108 countries and more than 4,500 have died. The spread has slowed in China but is gaining speed in Europe and the United States. World Health Organization officials said the outbreak qualifies as a global pandemic.
    • What symptoms should I look out for?

      Symptoms, which can take between two to 14 days to appear, include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Milder cases may resemble the flu or a bad cold, but people may be able to pass on the virus even before they develop symptoms.
    • What if I’m traveling?

      The C.D.C. has advised against all non-essential travel to South Korea, China, Italy and Iran. And the agency has warned older and at-risk travelers to avoid Japan.The State Department has advised Americans against traveling on cruise ships.
    • How long will it take to develop a treatment or vaccine?

      Several drugs are being tested, and some initial findings are expected soon. A vaccine to stop the spread is still at least a year away.


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