Villains of 2008 try to be the saviors of 2020

Paul Merski, group vice president of congressional relations and strategy at the Independent Community Bankers of America, dismissed this argument, saying banks were not looking for handouts, but wanted credit to go to small businesses that risk closing their doors.

“There is no need for bank bailouts because the banks that are getting into this pandemic are in extremely solid positions in terms of both capital and liquidity levels,” said Merski. “This is absolutely not a situation from 2008. It is the opposite.”

On Capitol Hill, the current potential legislative instrument is a phase 3 stimulus package, but Congress is likely to pass additional laws to address the economic consequences of the pandemic. Industry requests include recommendations that would allow banks to dive more freely into their financial buffers and allow more time to comply with a new accounting standard that requires them to immediately record potential losses on their books when lending.

Some Hill Democrats and watchdog groups were already on alert after one of the industry’s leading trade associations – the Bank Policy Institute – published a list of deregulated recommendations in the early days of the pandemic in the United States.

“It has made it really difficult to have an open discussion about all of the measures that should be taken here,” said Graham Steele, director of the Stanford Graduate School of Business Initiative for Business and Society and former Brown advisor. “It is a difficult environment to get involved in because there are only concerns that we will only get the deregulating ideas, we will not get the other parts that will rebuild the system.”

But in the past few weeks, the country’s largest banks have launched a remarkable PR campaign announcing their financial strength and willingness to save an economy that almost destroyed Wall Street 12 years ago.

It started with a fully televised White House meeting on March 11, where CEOs of Bank of America, Citigroup and other banking giants committed to doing their part.

Since then, they have jointly promised to temporarily stop buying back their own shares to free up capital – a controversial practice that mainly helps investors – and to use the Federal Reserve’s emergency funding to remove the stigma involved and encourage other banks to do so do the same.

“The Covid-19 pandemic is an unprecedented challenge for the world and the global economy, and the largest US banks have the undisputed ability and commitment to support our customers, customers and the nation,” said eight of the country’s largest banks about their exclusivity professional association, the Financial Services Forum.

The banks are now trying to use the emerging goodwill with the demand for cutting red tape.

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