Senators Ed Markey and Elizabeth Warren approached the state’s banking industry on Wednesday with a big ask: Suspend fees for consumers until the coronavirus crisis is over.
They fired off letters to leaders of nine major banks in Massachusetts and 10 credit unions, seeking a pause on everything from ATM fees to overdraft charges to account balance minimums.
They probably won’t get all that, at least not right away. But many bankers were already thinking about the issues the senators raised. They’re fully aware of the pressures from the pandemic, without prodding from Washington, and they’re coming up with various ways to help as thousands of Massachusetts residents suddenly find themselves out of work.
A group of local bank executives held a conference call on Tuesday with state and city leaders to compare notes, and talk about best practices during the pandemic to keep customers and employees safe and provide financial help to troubled small businesses and individuals.
Then, the Massachusetts Bankers Association and the Cooperative Credit Union Association issued a rare joint statement on Wednesday in part aimed at discouraging consumers from making large cash withdrawals, saying it’s safer to keep the money in their accounts. Meanwhile, many banks are restricting access to their branches for health reasons and relying more heavily on ATMs and online.
On the national level, a different group of lenders huddled on another issue: easing the burden of mortgage payments for borrowers whose incomes are disrupted by the virus. The Housing Policy Council, a coalition of major lenders, is crafting a mortgage payment deferral plan for people affected by the pandemic, although the precise details were still in the works as of Wednesday.
Another important step occurred Wednesday when the Federal Housing Administration, and Freddie Mac and Fannie Mae agreed to postpone foreclosures and evictions on the millions of mortgages they control for at least 60 days. This action follows a previously announced forbearance program that allows Fannie and Freddie borrowers to suspend payments for up to 12 months because of the coronavirus.
For Markey, it’s incumbent upon the banks to take on a leadership role. He said in an interview that Massachusetts families are already “paying a terrible price” in lost wages, as business shutter amid the outbreak. Hourly workers, in particular, can ill afford the disruption.
Financial institutions, Markey said, shouldn’t be making money off their fees when some Americans don’t know if they’ll make their next rent or mortgage payments. These extraordinary times, he said, call for extraordinary measures.
Dan Forte, president of the Mass. bankers group, said a number of banks are already responding to the crisis. Tiny Greenfield Co-operative Bank is creating a “payment holiday” to allow disrupted borrowers to defer their April and May loan payments for up to 60 days, and add those payments to the back end of the loans, for example, and giant Bank of America committed to spending $100 million to help local communities around the globe deal with coronavirus impacts.
And Ron McLean, president of the credit union group, said many of his members are waiving fees on late payments and overdrafts; some have already established emergency loan funds to help those most affected by the pandemic.
At Eastern Bank, chief executive Bob Rivers said his bank and others are weighing a number of options, including waiving certain fees, as well as allowing loan modifications. Rivers said a big priority is making sure his employees feel safe, so critical bank services can continue to function. (Eastern branches remain open, although most employees are working from home.) Eastern is also weighing philanthropic gifts to help its communities, and Rivers hopes to make an announcement about that within the next several days.
Representatives for the state’s biggest banks — B of A and Citizens Bank — said they plan to work with customers on their specific financial hardships. The Citizens spokesman said aid could include flexibility on late fees and loan payments, while the B of A spokesman said options there include refunds on fees, deferred payments, and no negative credit-bureau reporting.
Other examples: Rockland Trust and Berkshire Bank offer loan payment deferrals, an increase in daily debit card spending, and a waiver of penalties on early certificate of deposit withdrawals.
Finding a bank willing to embrace the senators’ dramatic call for a broad waiver of fees will be tough, at least right now. But banks and credit unions are, for the most part, well capitalized after a decadelong economic boom. These institutions depend heavily on their customers’ financial health. Most bankers have a strong motivation for offering some leniency during a crisis. And for any who don’t, Warren and Markey will be there to remind them.