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Earnings season kicked off on Tuesday, and executives are sounding off on the stimulus stalemate and the risks it poses to the ongoing economic recovery.
Hopes for a pre-election deal faded on Thursday after Senate Majority Leader Mitch McConnell said he’ll only bring a smaller measure to a vote. The statement effectively dooms the larger proposal penned by the White House and Democrats.
Here’s what five executives had to say about the lack of near-term aid and the challenges it presents.
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With earnings season officially underway, executives are weighing in on the stimulus stalemate that’s gripped the US economy for months.
The chance of a pre-election relief deal faded through the week as Senate Majority Leader Mitch McConnell doubled down on his opposition to a major bill. The senator indicated Thursday that he plans to bring only a smaller measure to a vote, dashing hopes for the $1.8 trillion to $2.2 trillion package currently being negotiated by Democrats and the White House.
Several indicators suggest the pace of economic recovery slowed into the fall as previous support programs dried up. Here’s what five executives had to say about the lack of new stimulus and the challenges it presents.
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JPMorgan: ‘We’ll probably see delinquencies tick up’
The March CARES Act played a major role in keeping Americans from defaulting on their debt, JPMorgan Chief Financial Officer Jennifer Piepszak said in a Tuesday earnings call. The “extraordinary support” played a major role in the initial economic bounce-back through the spring, but the bank is already preparing for a dire start to the new year.
“We’ll probably see delinquencies tick up in the early part of 2021. We’re not assuming further stimulus beyond the end of this year and how we think about reserves,” Piepszak said, according to a transcript provided by Sentieo.
She continued: “I think future stimulus would give us more confidence in the economy delivering on the base case.”
Bank of America: ‘Stimulus coming in would move us further’
A new relief bill would help struggling businesses and unemployed Americans, Bank of America CEO Brian Moynihan highlighted in a Wednesday call. Aid for state and local governments would also help prevent layoffs of government employees, he added.
Most major banks decreased their loan loss reserves through the third quarter as the economy rebounded. Still, Bank of America allocated $1.4 billion for potential credit losses.
“Stimulus coming in would move us further” toward lowering the loss provision, Moynihan said.
“You’d see the reserves come out further because the lifetime expected loss would be lower. That’s kind of the way it works.”
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Source:: Business Insider