This month will mark the seventh month after the onset of the COVID-19 pandemic. The banking sector just released its earnings and it is clear that America needs a second stimulus package to avoid a deeper recession.
During a recent conference among trade groups, Jamie Dimon, the JPMorgan Chase CEO revealed hai the pandemic has affected the company workers. As per reports, many are relying on remote working and around 40% of the company’s employees work remotely on a shift basis. He further elaborated on the need to resume “normal” workspace. He also said that returning to the office physically for workers is a priority if the service sector wants to escape a deeper recession, especially with the lack of a stimulus package.
Brian Moynihan, the CEO of Bank of America, said that even though spending via credit card has improved, the level of overall spending is still very low. He further mentioned that it’s because traveling and other such services have been put to a stop due to the COVID-19 pandemic.
Banks Say Stimulus Package Needed To Get Out Of Recession
The biggest question we are all dealing with right now is the amount of money that banks have set aside from homeowners, commercial real estate agents, business owners, and credit card owners. To everyone’s relief, the answer is not bad. Top bank heads have stated that they had anticipated the stimulus and resulting recession situation. And so, they had started adding less to reserves and even trimming it in some cases.
Ken Leon, an agent from CFRA, said that they have reached rock bottom with regards to loan loss reserves.
While the COVID-19 pandemic has hit everyone hard, analysts say that unemployment, borrowing, loan, and spending activities have started to recover from earlier this year. One of the main reasons for that is the first round of stimulus package. The Paycheck Protection Program, among other things, has enabled businesses to repay their loans.
First Coronavirus Aid Helped Keep The US Economy Afloat
Luke Lloyd, a strategist from Strategic Wealth Partners, echoed the same note saying that the first round of stimulus package helped the US economy immensely.
While spending and borrowing have improved, banks are still struggling to profit from lending loans. The federal funds rate is nearly nil. Moreover, Jerome Powell, also said that he is determined to keep the rate near zero for a couple more months. It doesn’t look like banks will be turning in any profit by lending money anytime soon.
Leon also said that around 60 percent of a Bank’s net revenue comes from this. However, now, these banks have been restricted to earn their revenues via borrower interest.
The need for stimulus seems to be growing fast as the recession gets deeper.