Trump and Wall Street try to restore calm as market tumult grows

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The top U.S. bankers sought to tamp down concerns that the wild stock market gyrations caused by the coronavirus would send the economy into a tailspin, telling President Donald Trump that the pandemic isn’t a repeat of the 2008 meltdown.

“This is not a financial crisis,” said Citigroup Chief Executive Michael Corbat, who was among a dozen financial leaders summoned to the White House Wednesday. “Banks and the financial system are in sound shape, and we are here to help.”

The group of executives pledged to help small businesses and consumers get through any economic damage as the virus continues to spread. They also encouraged the government to support fiscal stimulus policies.

Trump also chimed in, saying “I think you’re going to see a tremendous pent-up demand, which hopefully won’t be in the too distant future.”

The president said he would make a statement Wednesday night on how he will deal with coronavirus. He said he plans to address the nation at 8 p.m. Washington time.

Read more: Complete coverage of the coronavirus impact

Even as the financial industry presented a unified sense of calm, fresh evidence emerged that the market tumult was growing. The Dow Jones industrial average slipped into a bear market for the first time in 11 years and all but 10 stocks in the S&P 500 index were down in Wednesday trading.

Markets reacted negatively after the World Health Organization declared a pandemic and Trump didn’t provide specifics of “substantial” economic measures he’d promised, including aid for the airline and cruise industries.

And there are signs that executives see more trouble on the horizon. Corporations — preparing for the possibility of a drawn out slump — started to tap funding sources. The private-equity giant Blackstone Group asked companies it controls to draw down their bank credit lines to help prevent liquidity shortfalls. The firm’s CEO, Stephen Schwarzman, was among executives at the meeting with Trump.

“The financial system of the U.S. is in great shape and is prepared to handle this problem,” Schwarzman told the president.

The White House meeting, held as the coronavirus outbreak roils markets and the global economy, included Goldman Sachs Group Chief Executive David Solomon and Wells Fargo CEO Charlie Scharf.

The president’s focus on fiscal stimulus “is very important,” the hedge fund billionaire Ken Griffin of Citadel said at the meeting.

The number of confirmed coronavirus cases in the U.S. has continued to rise. As of Wednesday, there were more than 1,100 cases in the U.S. and 30 deaths, according to data compiled by Johns Hopkins University.

At Wednesday’s meeting, the White House was expected to seek insights from the executives into the market gyrations and learn about what types of assistance banks will be providing to customers and clients, including small businesses, said a person with knowledge of the matter, who asked not to be identified discussing plans for the private meeting.

Many lenders are leery about asking the White House for regulatory relief or other assistance in response to virus, according to executives who asked not to be named so they could speak freely.

Even though it has been more than a decade since the 2008 financial crisis, Wall Street firms are still a political target and do not want to be seen as trying to benefit from the pandemic, the executives said.

In a floor speech Wednesday ahead of the White House meeting, Senate Minority Leader Chuck Schumer of New York said any government aid should be focused on helping Americans and not bailing out corporations or “deregulating the banking industry.” New York is home to some of the nation’s largest lenders, including JPMorgan Chase, Citigroup and Goldman Sachs.

Banks already have reaped the benefits of Trump’s deregulatory agenda. Since the president took office in 2017, regulators have relaxed several major rules put in place after the crisis. They include easing restrictions on speculative trading and capital requirements, as well as giving banks breaks on their annual stress tests.

Also attending the White House meeting were Bank of America CEO Brian Moynihan and JPMorgan Chase co-President Gordon Smith, according to the White House. Smith and co-President Daniel Pinto are in charge of JPMorgan while CEO Jamie Dimon recovers from emergency heart surgery last week.

Bloomberg News
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