Connecticut’s financial institutions are moving to reassure customers about their accounts, as the state’s economy creaks under the strain of the coronavirus crisis.
The state just clocked its worst week in living memory for unemployment claims, and businesses everywhere are shutting their doors, not knowing whether they’ll reopen. That’s left people wondering in some cases just as much about their financial health as their physical safety in the coronavirus pandemic.
“The desire to fill your basement with toilet paper can clearly bleed over into your desire to have enough cash on hand to manage a disruption,” said Bruce Adams, CEO of the Credit Union League of Connecticut. He said there’s no sign yet that people are taking money out in unusual amounts -- and that’s good.
“Your money is safe, your money’s insured,” he emphasizes.
And it’s a message that’s reinforced by the state’s banks.
"No one’s ever lost a dollar of an FDIC-insured deposit since 1933,” said Tom Mongellow, CEO of Connecticut Bankers Association. “And that’s a powerful figure.”
In fact, Mongello said his members have so far heard much more from their commercial customers -- businesses large and small -- than from individuals. Banks and credit unions both say they’re trying to get creative in an effort to help out with the sudden financial shock many are experiencing.
“Each bank always essentially takes the time, looks at the tools in their toolkit, tries to work with their customers,” Mongellow said. “We have a clear path to follow.”
Those tools may include fee waivers, emergency loans, credit restructuring, mortgage forbearance or new federal and state programs that are being formulated each day -- including payroll loans for businesses that want to keep their employees on the books.
“We have been fielding calls, as you might imagine, from commercial borrowers that may have restaurants or gyms which are now closed, and having concerns about cash flow needs,” Mongellow said.
He said the governor’s speedy emergency declaration, made early last week, has allowed the state Department of Economic and Community Development to fast-track the federal Small Business Administration’s disaster relief loan program. Businesses can now apply for up to $2 million in low-cost loans from the federal agency.
DECD is formulating another in-state small business loan program. It says for those who avoid layoffs, those loans may be forgivable. And more federal action to help distressed businesses -- and laid-off employees -- may come this week as Congress finalizes a relief package.
The Connecticut Banking Department, the state’s regulator, has urged maximum flexibility from all institutions as they help distressed customers.
According to Adams, for credit unions, a lot of this work is intuitive.
“We’re financial problem solvers by design,” he said. “When someone comes in with an unforeseen medical emergency or they’ve lost their job or whatever, the credit union typically spends time with the person to work it out and help them make a good financial survival plan.”
But he said the sheer size of the problem also emphasizes the need for financial institutions to plan together.
“This is a crisis of broad scale, and so it requires a unified effort across industries and within the financial services industry in general.”
He urges customers to make use of digital platforms to do their banking instead of visiting their branch and says many institutions may begin cutting down on lobby hours to reinforce social distancing. And he has one additional message for those who suddenly have found themselves in financial crisis.
“I would caution everyone to avoid trying to get quick money, emergency money off the internet from a payday lender,” he said.
If you need help, he said -- a loan from a credit union or bank is a much safer option.