Richard Hunt, Consumer Bankers Association CEO & President joins the On the Move panel to discuss the latest on the stimulus bill and whether the Democrats and Republicans can come to an agreement before the election.
JULIE HYMAN: --group is resuming its cutting of jobs. That's something I mentioned before the break. It will represent about 1% of its workforce, but because of hiring overall, headcount is unlikely to change. Is this just a sign that, another sign, perhaps, that things are normalizing to some extent? Let's talk about it specifically for the banking industry. Richard Hunt is the Consumer Bankers Association CEO and President.
Richard, thank you for joining us. And indeed, you know, the banks are grappling with a lot of the same things that other industries are grappling with, and they also have low rates to contend with, which is on balance probably a negative. But where does the industry stand right now in terms of the broader economy, and in terms also of what it wants to see from Congress right now?
RICHARD HUNT: Yeah, well, sure. Look, the banks have much more better capitalized than they were in 2008. Obviously, most of our employees are still working from home, though the branch distribution network is basically about 99% open and running. The banks led the movement on the Paycheck Protection Program back starting in March, helping out some five million small businesses. We're calling on Congress to finish the job. I understand there's major differences between the House and the Senate on the overall stimulus package, but what's captured within the stimulus package is the forgiveness portion of the P3 program.
You've got millions of small businesses who are calling our banks each and every hour wanting to know when is Congress going to act on streamlining the Paycheck Protection Program. You cannot have small businesses spending I know a third of their total loan on CPAs. That's outrageous. So there's bipartisan legislation both in the House and the Senate led by Senator Cramer and Senator Menendez, and I assure you those two usually do not co-sponsor legislation in the Senate. Then in the House of Representatives, you have Congresswoman Houlahan and Congressman Upton, who have come together with 77 co-sponsors in the House to have streamlined forgiveness for these five million small businesses--
ADAM SHAPIRO: Richard.
RICHARD HUNT: Who are just trying to make ends meet during a pandemic crisis.
ADAM SHAPIRO: And that's a key point, because those businesses are crucial to employing people. The banks themselves, whether we get this from Congress or not, they're not, your clients, are not in jeopardy, because the money came from Congress. Or are they in jeopardy? Because I imagine there's also need to help people with mortgages and the things that the banks may still have on their books.
RICHARD HUNT: Well, look, first and foremost, those small businesses are the banks' clients. We want to do every single thing we can to help them get back on their feet and make a good product or a service so they can stay in business. So while most of them will be forgiven, we want to make sure we can get small businesses going again. And hopefully, Congress will extend the program to allow people to have a second opportunity to have more money to open their restaurants once again.
JULIE HYMAN: Richard, can you give us some numbers around what your members are seeing? I mean, you know, as you say, these small businesses are their clients. Are the banks in distress? What is the hit to profit that they are seeing as a result of all of this?
RICHARD HUNT: No, the banks are certainly not in distress. Again, we're much better capitalized than we were in 2008. Earnings reports have been very good. It's because underwriting standards are the best, I think, in a global economy there can be. But the fact of the matter is we have too many deposits. We want to make loans, but we're not going to make loans until people are confident that this economy is ready to get moving again. Obviously, we're waiting on a vaccine as well.
But until we restore confidence in the American public, it's going to be tough to make more and more loans. That's why right now, the only game in town is basically the Paycheck Protection Program. But the fact that Congress is at a stalemate, and they're leaving out to dry five million business owners. And look, these are the small mom and pop companies of this country.
We're looking for forgiveness of $150,000 and below. Not the $8, $10 million loans. The $150,000. These are people on Main Street. This is my sister, who is a sole proprietor in Crowley, Louisiana, who employs one person, but yet is told by her CPA she's going to have to fork over $2,500 just to have a simplified process through SBA. That's just absurd. So Congress needs to get off its duff and get moving to help small businesses out.
- Richard, we started off this conversation talking about the layoffs at Citigroup. What I find very interesting is that originally, perhaps earlier this summer, we talked about Citigroup was at the forefront of hiring interns and hiring them full time, and that was a program that a really pushed. When you think about the pipeline for talent, we know, over the last couple of years MBA grads have been going to the tech world, have sort of been neglecting, perhaps, the banking industry and the financial world. How do you anticipate that this period of time, these big banks will continue to be able to recruit and to attract the brightest and smartest talent?
RICHARD HUNT: Well, look, I hate to say I told you so, but banking has been around for many, many decades and fintechs are the new kid on the block, if you will. I think what these people who are just graduated realize, banks are a cornerstone of the economy. They know how to weather downturns and not just upturns. You've seen a lot of fintechs already go wonder or who are partnering with the banks.
Many of our banks are fintech companies now. Take a look at Bank of America now, with Erica just adding 500 new characteristics to its program. So the story has not been written about technology just yet, but I think when you're looking for a job and a career, more and more people are now turning to banks, but they're now learning banks are no longer an elephant and can't move. That banks are becoming fintechs of their own.
JULIE HYMAN: Richard Hunt, Consumer Bankers Association CEO and President, thanks so much. Appreciate it.
RICHARD HUNT: Yeah, thank you.