Banks Stand Ready and Willing to Lead Economy Through Uncertainty
This week, the CEOs of seven of the nation’s largest retail banks testified before the House and Senate. These hearings came at a time of significant economic uncertainty for the country as consumers grapple with historic levels of inflation, declining wages, and a potential recession ahead. Fortunately, America’s leading banks remain well-positioned to support families and small businesses across every community they serve, just as they’ve done throughout this pandemic.
Policymakers on Capitol Hill should recognize the important role banks have and will continue to play as financiers of the American Dream and guardians of our economy.
Over the past two years, banks have moved heaven and earth to support families and help sustain small businesses grappling with the economic impact of the COVID-19 pandemic. Perhaps nowhere was this more evident than through the Paycheck Protection Program (PPP) — an entirely new government relief program administered by America’s leading banks to help small businesses keep their lights on and their employees on payroll. Some banks dedicated more than one third of their entire workforce to process PPP applications and deliver much-needed assistance, ultimately helping to protect more than 90 million American jobs.
For small business owners, the assistance provided to them through their bank made all the difference in the world. Jerry Siegel, owner of W.S. Jenks & Son, one of the oldest hardware stores in Washington, D.C., said, “Truist enables us to finance our business, to provide the products and services that the residents of this community actually use and depend on.” Paula Vargas, owner of El Coyote Restaurant in Queens, New York, echoed a similar sentiment, saying, “Chase not only helped me every step of the way with the application process but did so at any time of the day or night.”
Recognizing the disparate economic impacts of the pandemic, America’s leading banks re-doubled their efforts to address inequities made worse by the pandemic and provide more pathways to economic growth for historically underserved communities. Banks already invest more than $500 billion annually into low- and moderate-income neighborhoods through the Community Reinvestment Act (CRA) and other projects, but many went even further to deliver on their mission. Through their Open For Business Fund, for example, Wells Fargo donated more than $400 million to help minority owned entrepreneurs get back on their feet.
During this time, banks also continued to unveil new products and services to provide consumers greater choice, transparency, and control of their money, most notably in the overdraft marketplace, where a growing share of banks now offer innovative overdraft solutions to meet the evolving demands of the people they serve. These reforms from the nation’s largest banks, have occurred without regulatory or legislative intervention and collectively represent a transformational moment in time for the industry. In fact, new data from Curinos estimates that if current trends continue, overdraft fees are expected to fall by nearly 70% by next year, yielding more than $28 billion in savings for hardworking Americans by 2025.
The banking industry is also among the most well-regulated and highly competitive in the world. Consumers benefit from the ability to choose from nearly 5,000 financial institutions to meet their unique needs. While the country has made great progress in our recovery from the pandemic, more than half of Americans still can’t cover a $1,000 emergency expense. Millions of American families rely on bank products like overdraft and small dollar loans as an emergency safety net in times of need.
Congress should work in tandem with banks to protect and expand access to these financial tools, recognizing that alternative options – whether a fintech or payday lender – do not provide the same level of protections consumers deserve and have come to expect from a bank.
For more than a century, banks have proudly served as financiers of the American Dream and drivers of economic growth across every region they serve. Whether buying a home, pursuing higher education, or launching a small business, banks remain deeply trustworthy resources for families, small businesses, and communities during good times and bad.
Policymakers should acknowledge the commitment banks have made throughout this pandemic to help their constituents thrive. As the nation and our economy faces uncertainty once again, our message as an industry remains clear – we’re ready and willing to help.
Lindsey Johnson is the President and CEO of the Consumer Bankers Association, the only member-driven trade association focused exclusively on retail banking.
