Quick action by regulatory and political authorities in meeting the financial challenges of the coronavirus crisis was praised Thursday by the board chairman of the federal insurer of bank deposits Thursday in a speech before a European group of bank regulators.
Federal Deposit Insurance Corp. (FDIC) Chairman Jelena McWilliams told the 2020 annual conference of the Single Resolution Board (SRB, a group representing the European Bank Union members) that the actions taken in response to the impact of the coronavirus crisis on financial institutions were “swift, decisive.”
“These actions focused on providing necessary flexibility for banks to meet the needs of their customers and encouraging banks to work with affected borrowers,” she said.
Among the key actions she said have been taken include:
- Banks were encouraged to use their capital and liquidity buffers to lend and provide other critical financial services;
- Regulators made targeted, temporary regulatory changes to facilitate lending and other financial intermediation;
- “Needed flexibility for banks to work with their borrowers and modify loans when appropriate” was provided by regulators; and
- Small business lending was fostered by regulators through the use of new government programs.
“As a result of these and other actions, mortgages continue to be made and refinanced,” she said. “Businesses – though struggling – continue to have to access to credit and, thankfully, our financial system remains strong.”
But McWilliams told the group much more work is ahead given the economic contraction and unemployment growth resulting from shutdowns related to the pandemic. “We do not know how quickly things will return to normal, but we do know that many people are struggling and worried about making ends meet,” she said.
“As regulators and supervised institutions continue to respond, we must remain vigilant to the rapidly changing environment and focused on adapting in ways that will best serve our communities and nations,” she added. “To that end, we are going to continue to build plans, test scenarios and improve capabilities. We are going to continue to push to make sure that our financial institutions are safe and sound so they can continue to support our economies. We are going to inspect and polish the tools in our toolkit.”