How Banks Are Helping Customers Through Pandemic

Banks across the US have brought in new programs to help individuals and small business through the economic crisis caused by the COVID-19 coronavirus pandemic.

The Federal Reserve cut the federal funds rate for the second time in two weeks on Friday, reducing its target range to 0-0.25%.

The rate-setting Federal Open Markets Committee said in a statement that it expected to maintain this level “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals”.

“The committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy,” the statement said.

It also announced a plan to increase its purchases of Treasury securities to reach holdings to $500 billion, and $200 billion of mortgage-backed securities.

Together with other central banks around the world, the Federal Reserve also took steps to reduce the price of US dollar liquidity swap arrangements by 25 basis points to improve liquidity conditions for financial institutions.

Actions to Help Customers

A number of banks have announced financial assistance measures in the past few days.

The Bank of Hawaii is offering financial assistance programs to help customers in Guam, Saipan and Palau that may be facing financial hardship, primarily to a drop off in tourism. The measures include extensions of loan repayments for up to three months.

“We recognize the hardship this is presenting and have representatives ready to work with individuals and assess their needs,” said Peter Ho, chairman, president and CEO of Bank of Hawaii.

Washington Federal Bank has begun offering small business lines of credit up to $200,000 interest free for 90 days in response to the pandemic, part of a $100 million commitment to provide credit to “help the business community weather this financial disruption”.

The bank said it would “expedite processing for lines of credit up to $30,000 to existing and new credit-worthy clients in their regional market who have been in operation at least two years and can show a 10% loss in revenue due to the impact of coronavirus”.

US Bank has made temporary adjustments to some of its lending products and services, effective until the end of the month, “to make them more affordable for customers”.

“We understand the financial pressure that many of our customers, both consumers and businesses, are facing due to the coronavirus and we’re here to help,” said Andy Cecere, chairman, president and CEO of US Bank. “We’re doing everything we can to limit the virus’ potential impact on our employees, customers and operations. The health and safety of our employees and the financial needs of our customers are our top priorities, and we are acting aggressively to ensure those.”

Associated Bank is to suspend access to most of its branch locations from March 17 until April 13. Philip Flynn, president and CEO, said the bank’s drive-through facilities remained open.

Elsewhere, the Small Business Administration (SBA) on March 12 announced measures to support business owners affected by the pandemic. It is to offer low-interest disaster relief loans to help with meet debt payments, payroll, accounts payable and other bills.

The interest rate is 3.75% for small businesses without credit available elsewhere. The interest rate for non-profits is 2.75%.

Customers Bank said it would reach out to its small business client to raise awareness of the relief available to them, as well as other financial assistance options, including lines of credit.

Richard Ehst, president and CEO of Customers Bank, added that the company had committed $200 million to new small business lending to qualifying companies.