Atlanta Fed President Raphael Bostic said the central bank will do whatever it thinks is needed to aid the economy.
Photo: christopher aluka berry/ReutersFederal Reserve Bank of Atlanta President Raphael Bostic said Monday he doesn’t plan to heavily second guess decisions banks have taken during the coronavirus crisis.
Speaking to a group in Nashville, Tenn., via video, he said the Fed, in its role as a banking regulator, has been encouraging banks to “deploy their capital as much as they can, to provide loans, to work with their borrowers, to find ways to help reduce the stresses, the short-term stresses many business and many families are feeling” amid the current economic catastrophe.
Mr. Bostic says banks are getting the message, and the Fed will keep that in mind down the road.
“I’ve been pleased that in just about all the conversations I’ve been having with bankers, they are doing this of their own accord, they are eager to do it. And what we’ve tried to do is encourage that as much as possible,” Mr. Bostic said.
“One of the most important aspects to this is our regulatory role,” the official said.
“We’ve tried to be as clear as possible that we will remember that banks have operated in an emergency situation, have made emergency decisions, and we won’t penalize them for that nine to 12 months from now when we do our regulatory reviews,” Mr. Bostic said, adding “I’m going to make sure we hold to that.”
The Fed’s reaction to the continuing pandemic that has led to a historic deterioration in the economy includes lowering its interest-rate target to near zero, ramping up bond buying and launching a broad array of lending programs for both the finance sector, businesses and local governments. Some of those efforts are operating through private banks.
In other comments, Mr. Bostic said if the Fed sees a need and has the ability and authority to act, it will do whatever it thinks is needed to aid the economy. He also said he was cautiously hopeful about reopening efforts, even as he noted real health risks are still in play.
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