Stalemate in Washington brings turmoil to banks’ emergency planning
By Victoria Guida
The battle in Washington over the size and scope of a coronavirus relief package has piled on more uncertainty for the nation’s banks as they try to plan for an already wildly unpredictable future. In calls with investors this week, executives of some of the biggest U.S. lenders voiced concern about the strength of the recovery, including the pace at which unemployed people are returning to work, and said that without more help from Congress, the economy’s struggles are likely to continue….“Their earnings depend on the economy as do their losses,” said Karen Petrou, who advises financial firms in her role as managing partner at Federal Financial Analytics. “They’re the canaries in this coal mine.” One bright spot is that banks have much larger loss-absorbing capital buffers than they did before the 2008 financial crisis because of a slew of new rules aimed at reducing their reliance on debt.