Guide for When and How to Reopen Your Institution
“This will be the most critical decision that most of us will ever have to make in our entire professional careers,” Chris Nichols writes poignantly in the first of two blogs on preparing to bring employees back to the workplace. In the first blog, Nichols, Chief Strategy Officer for CenterState Bank, describes the models bankers can use to help them decide when to act. In the second, he presents a list of 20 ideas, practices, and considerations — crowdsourced from 100 financial institutions — for reopening a bank or credit union.
PPP Round 2 May Give Community Institutions a Long-Term Advantage
Even before their bad experiences in the frantic first round of the Paycheck Protection Program, nearly six in ten small businesses were thinking of switching banking relationships, according to a survey by Cornerstone Advisors and Autobooks. Ron Shevlin, Cornerstone’s Managing Director of Fintech Research, notes in a blog that 57% of small businesses bank with Bank of America, Chase or Wells Fargo. Given that $60 billion of the second PPP allotment of $320 billion is earmarked for community institutions, Shevlin believes many small enterprises could end up moving their accounts out of the megabanks, if the smaller institutions come through for them.
Digital Ad Report Provides Financial Marketers With Early Read on COVID Impact
Merkle’s Digital Marketing Report for Q1 2020 gives a picture-window view into the startling impact of the pandemic on digital advertising, covering Google, Amazon, social media and other platforms. Paid search was up for financial services, although not as much as retail and Google text ads shot way up, according to the report. In addition, site visits produced by organic search fell 15% year-over-year across all brands.
USPS: New COVID-Inspired Banking Competitor?
In an op-ed in the New York Times, Sen. Kirsten Gillibrand (D-N.Y.) proposed reestablishing postal banks as a way to help serve unbanked consumers hurt by the economic effects of the coronavirus pandemic. In late 2017 Gillibrand had introduced the Postal Banking Act to do the same thing. It was not acted upon at the time. As recounted in a 2014 article in Slate, postal banking existed in the U.S. from 1911 to 1966.
( Read More: What Banking Will Look Like After the Pandemic )
PPP Loans Over $2 Million to Get SBA Audit at Forgiveness Stage
The Los Angeles Lakers is one of a group of companies that has chosen to return federal Paycheck Protection Program loans after the government made it clear the effort had not been intended for large organizations with alternate sources of liquidity. These occurrences (Coronavirus Insights 4/23) have caused a major new wrinkle in PPP.
“I’m a big fan of the team, but I’m not a fan of the fact that they took a $4.6 million loan,” said Treasury Secretary Steven Mnuchin in an interview on CNBC’s Squawk Box on April 28. “I think that was outrageous and I’m glad they returned it or they would have had liability.”
Any company that certifies that it needs PPP funds for liquidity and doesn’t can be criminally liable, said Mnuchin. He announced later that day that all loans of $2 million or more would be audited by the Small Business Administration when borrowers applied for loan forgiveness. Other loans may also be audited.
“Banks were not required to do due diligence,” said Mnuchin when asked if they were at fault. “I really fault the borrowers who made these certifications.” He did say banks that attempted early on to prioritize access for large customers on their websites were told to stop that.
Mnuchin said a million of the PPP loans made so far are for companies with under ten employees. Measures are being taken to prioritize employers in areas more heavily hit by COVID-19. Mnuchin said 30 million workers were helped through the program so far and that he expected 60 million would be helped by the time it is done. He said the latter is about half of the U.S. small business workforce.