The coronavirus has brought together a badly divided country in a way almost never seen.
With an invisible enemy uniting the nation, the vibrant network of more than 5,000 local banking institutions, if properly harnessed, can be a crucial weapon. There is no better vehicle available to stabilize the nation’s economy than the banks rooted in their local communities.
These banks are closely connected to individual and small-business borrowers, with loans usually secured by residential and commercial real estate, farmland and automobiles in cities, suburbs and towns across the country. While all banks, their customers and the communities they serve will benefit from the CARES Act recently adopted by Congress, more help specifically for smaller banks and middle America is necessary.
The Troubled Asset Relief Program enacted in response to the last financial crisis primarily helped major financial institutions in metro cities recover. In this new crisis, Congress and federal banking agencies need to encourage community banks with assets of less than $10 billion, and with satisfactory ratings from their federal regulators, to provide immediate temporary relief to the borrowers most adversely by the economic downturn amid COVID-19.
Community banks provide roughly half of the business loans in the country, and they must be enlisted to help their communities and borrowers. The current legislation provides that new SBA- guaranteed loans can be offered by banks. The problem is that community banks also need help to protect themselves and the individual, agricultural and small-business borrowers with existing loans.