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BUSINESS/TECHNOLOGY Wednesday 25 March 2020
With billions at stake, banks try to save stunned borrowers

By KEN SWEET
AP Business Writer
NEW YORK (AP) — Tarred
as villains during the 2008
financial meltdown, banks
of all sizes are trying to help
out Americans reeling from
the economic crisis caused
by the coronavirus out-
break.
Banks are scrambling to
put into place loan forgive-
ness and relief programs,
working to keep their cus-
tomers from panicking or
falling into financial ruin.
They have a vested interest
preventing millions of peo-
ple and businesses from
defaulting on hundreds of
billions of loans at once,
something that would do
significant damage to the
banks' own finances.
Unlike 2008, banks are not
the cause of economic cri- This Oct. 8, 2014, file photo shows a Wall Street address carved in the side of a building, in New York.
sis gripping the nation. And Associated Press
banks now have plenty of
capital on hand to handle is still accumulating while any negative activity like tive credit reporting data, those companies would in
this crisis, economists say. in these programs. Others missed payments to the which would destroy the turn continue paying their
But the potential for millions have instituted forbear- credit bureaus. So has JPM- credit scores of millions of bills.
of their customers to de- ance programs, where organ Chase, Wells Fargo Americans who were pay- "We are in a strong financial
fault on credit cards, small there will be no penalty for and Citigroup. ing their bills on time but position, and because we
business loans and mort- a customer who wants to Smaller banks are also suddenly find themselves are doing so well, we can
gages means banks have hold off paying debts for 30 acting to help customers. out of a job. That would hopefully provide some re-
to do something to protect or 60 days. Southern Bancorp, with make giving loans in the fu- lief," Williams said.
borrowers, many of whom Huntington Bancshares, a roughly $1.5 billion in as- ture to these impacted bor- While the banks are not
went from having a job or a $100 billion bank operating sets headquartered in Ar- rowers more difficult. asking for a government
business to nothing, some- mostly in the Midwest, has kansas, is modifying loans Lastly there's the politics. bailout this time, they have
times in a matter of days. instituted 30-day deferral as quickly as possible or The Great Recession was benefited from the recent
Husband and wife team programs for any borrower charging only interests on caused by careless banks moves by the Federal Re-
Shari and Larry Kaynen who asks for help — no pa- loans where it can for small making too many bad serve, which has slashed
were forced last week perwork or questions asked business borrowers or cus- loans, which ultimately re- borrowing costs to zero and
to close their chain of six — and is reaching out to tomers. quired U.S. taxpayers to instituted bond-buying pro-
high-end clothing stores customers asking if they "We're telling our folks, 'Be backstop or bail them out. grams to help banks quickly
called Shari's Place, based need more time. safe. Be calm. We're here The bailouts of 2008 and offload high-quality assets
in Greenvale, N.Y. They are They are extending the de- to help however we can,'" 2009 have not been forgot- for cash. quickly. The Fed-
now working with their bank ferrals 30 days at a time, if said Darrin Williams, CEO of ten by the industry. eral Reserve has expanded
to rework their long-term necessary. Southern Bancorp. While other industries like that to include things like
debt into new terms with "There is a place for our in- Banks are putting these the restaurants, hotels and commercial paper, corpo-
lower interest rates that will dustry, in this crisis, to do all programs in place partly airlines have petitioned rate debt and other assets
help their cash flow. we possibly can to mitigate because they would be Washington for aid in the in a way not seen since the
Larry Kaynen said that their the damage that is hap- facing a massive number aftermath of the coro- Great Recession.
bank is polling all of its retail pening," said Stephen Stei- of defaults and bad loans navirus-fueled economic While banks are taking their
industry clients to figure out nour, Huntington's chair- on their books without them meltdown, the banks have own actions, State and
how they are going to stay man and CEO. - causing billions of dollars largely remained on the federal regulators are also
in business for week with The bank has even moved worth of paper losses to the sidelines - asking for chang- stepping in to protect bor-
"zero" sales. employees at its branches banking sector. Bank stocks es to how bank capital is rowers.
"This could mean a lot of — which are operating un- have been hit particularly measured during a crisis Governor Andrew Cuomo
ruin to a lot of small busi- der reduced or restricted hard this year as they are and other minor issues. The of New York imposed a 90-
ness" said Shari Kaynen. "I hours to protect against vi- considered a proxy for the CEOs of the big banks went day moratorium on mort-
am not corporate Ameri- rus transmission — into new overall economy. The KBW to the White House ear- gage payments if a bor-
ca. I have millions of dollars roles like calling borrowers Bank Index, composed lier this month to meet with rower has been financially
worth of merchandise, but or potentially even helping of banks from across the President Trump with a "we struck by the outbreak. The
I still have to pay my land- customers refinance their country, is down 45% this are here to help." Department of Housing
lord rent." mortgage. year alone compared with While the banks are not and Urban Development
The aid the bank provide The biggest banks are tak- the 15.5% decline of the asking for large things in this has imposed a 60-day mor-
varies in generosity de- ing similar actions. Bank S&P 500. bailout bill, they know a lot atorium on all evictions and
pending on the bank, how- of America is allowing Further, the credit report- is at stake. foreclosures on all homes
ever. Some are just allow- customers to defer pay- ing companies like Ex- By proxy, banks would ben- with a loan through the
ing customers to defer pay- ments across all of its prod- perian and Equifax would efit from any government Federal Housing Adminis-
ments, meaning interest ucts and is not reporting be swamped with nega- aid to companies because tration, or FHA.q