The Fed lifts a Wells Fargo growth restriction.
The Federal Reserve said on Wednesday it had temporarily lifted a growth restriction it had imposed on Wells Fargo in the wake of the bank’s fake account scandal in another effort to expand small business owners’ access to emergency loans.
The Fed said in an announcement that the move was a response to “extraordinary disruptions from the coronavirus,” which has cause a widespread economic shutdown and resulted in the loss of millions of jobs. The federal government is trying to keep small businesses afloat through the $349 billion Paycheck Protection Program, which provides forgivable loans they can use to pay their employees, rent and mortgages. The program has had a rocky start.
Wells Fargo, which is the country’s fourth-largest bank, said on Sunday its balance sheet had reached a $1.95 trillion limit that prevented it from making more loans. That limit was imposed two years ago and was meant to be in place until the banks leaders could demonstrate that it was being run in a way that no longer put its customers at risk.
The bank has not yet made the necessary changes, according to regulators, but reaching the limit meant it could not participate fully in the program.
Wells Fargo’s small business banking operation accounts for 20 percent of the United States market. But the growth cap limited lending to a volume of just $10 billion, well under the volume of business it was capable of doing. The Fed’s announcement means it can now keep lending, but only under the program.
Stocks on Wall Street are higher as investors weigh latest economic data.
Stocks in the U.S. climbed on Wednesday, as investors weighed data showing the extent of the economic damage wrought by the coronavirus pandemic against signs of progress in the effort to contain it.
The S&P 500 rose more than 2 percent, while major indexes in Europe were slightly lower.
Investors had in recent days found solace in signs that the outbreak was peaking in some of the hardest-hit parts of the United States and Europe. On Wednesday, China lifted its lockdown on the city of Wuhan, where the virus emerged.
Through Tuesday, the S&P 500 was up nearly 19 percent from its March 23 low.
But sentiment remains fragile, and there are plenty of reasons for investors to be concerned about the economy. European Union leaders on Tuesday night failed to agree on financial tools to help countries in the bloc struggling with the pandemic, and new data forecast a deep recession in both France and Germany. Japan and South Korea this week joined other countries preparing big economic rescue packages.
Oil prices rose on futures markets, in part on hopes that major producing countries like Russia and Saudi Arabia could put aside their differences. That helped lift shares of energy producers. Noble Energy, for, example gained 6 percent and was one of the best performing stocks in the S&P 500.
Shares of FedEx rose 6 percent and UPS gained 3 percent after a report that Amazon would stop handling third-party shipments. Amazon is suspending the service to focus on its own customers orders, The Wall Street Journal said.
Demand for food assistance in the United States is surging, as millions of Americans find themselves out of work and school closures mean that many families who counted on them for free or subsidized meals need to turn elsewhere.
The rise in need is coming just as food banks face shortages of both donated food and volunteer workers.
It’s a nationwide phenomena:
At Food Bank for the Heartland in Omaha, the amount of food donated for March dropped by nearly half. The food bank typically purchases $73,000 of food in a month this time of year but has spent $675,000 in the past four weeks.
In Jonesboro, Ark., after a powerful tornado struck, a food bank received less than half the donations it expected because nervous families held on to what they had.
In Washington State and Louisiana, the National Guard has been called in to help pack food boxes and ensure that the distributions run smoothly.
Feeding America, the nation’s largest network of food banks, with more than 200 affiliates, has projected a $1.4 billion shortfall in the next six months alone.
“I’ve never seen anything like it,” said Stacy Dean, vice president for food assistance policy at the Center on Budget and Policy Priorities, a left-leaning research organization in Washington. She has studied food security for more than a quarter century. “People love the phrase ‘the perfect storm,’” she added, “but nothing is built for this.”
The World Trade Organization said Wednesday that global trade was set to fall sharply this year, as the spread of coronavirus locks down factories, suppresses consumer demand and disrupts global shipping markets.
In a video briefing, Roberto Azevedo, the organization’s director general, said that global trade volume could shrink by 13 percent to 32 percent or even more, compared with the previous year.
“Trade in 2020 will fall steeply in every region of the world and basically across all sectors,” he said.
Global trade could rebound rapidly after that, but it would depend on how quickly the pandemic was brought under control, and the policy choices governments took to support their economies, Mr. Azevedo said.
Global trade growth had already slowed last year to the weakest level since the financial crisis, bogged down by a trade war between the United States and China and slowing economies in Europe and Asia.
But the pandemic has slammed the brakes on various segments of global trade. Container volume in Shanghai, the world’s busiest port, fell 20 percent year-over-year in February, while cargo volume sank 23 percent at the port of Los Angeles in the same time frame.
Amazon will pause its shipping pilot program.
Amazon said on Wednesday that it planned to pause a pilot program that shipped products for sellers on its marketplace in another move to ease the pressures on its logistics operations, which are stretched thin by the surge in online shopping as Americans hunker down.
The pilot program, called Amazon Shipping, picked up packages that were already packed and labeled from a seller’s warehouse and then delivered the items to customers through Amazon’s delivery network. It competed with U.P.S. and FedEx’s ground service. Started in 2018, Amazon Shipping had expanded to a handful of cities, including Los Angeles, New York and Chicago. The last shipments will be on June 5.
The pause was first reported by Business Insider.
Europe’s biggest economies brace for the sharpest drop since World War II.
Europe’s pandemic-induced lockdowns were widely expected to throw the continent into a deep recession. Germany and France, the largest economies, said on Wednesday that they were headed toward their sharpest downturns since World War II, a warning that showed just how bad it’s about to get.
France officially slid into a recession after suffering one of the worst quarterly contractions in more than 50 years. Growth tumbled an estimated 6 percent from January to April, from the fourth quarter, the central bank said. For every two weeks the population remains under confinement, the economy shrinks by at least 1.5 percent, it added.
And Germany is sliding toward its deepest recession on record, with growth expected to plunge almost 10 percent from April through June, five leading economic institutes said Tuesday.
Tesla plans to cut salaries and furlough some employees starting on Monday, according to an internal memo viewed by The New York Times.
“This is a shared sacrifice across the company that will allow us to progress during these challenging times,” Valerie Workman, Tesla’s head of human resources for North America, said in the memo. The electric carmaker expects to resume normal operations at its U.S. facilities on May 4, she said.
Salaries will be cut by up to 30 percent for vice presidents and more senior executives and by 20 percent for employees at the director level and above. Pay will be reduced by 10 percent for the rest of Tesla’s salaried work force. Tesla employees who cannot work from home and haven’t been reassigned to other on-site work would be furloughed, according to the memo.
The news of pay cuts and furloughs at Tesla was first reported by Bloomberg News. The company did not respond to a request for comment.
Tesla suspended operations at its factory in Fremont, Calif., on March 23 under pressure from local officials. The automaker appeared to continue making cars for several days in defiance of a county order halting all nonessential activity.
Gig workers are facing challenges getting unemployment aid.
The $2 trillion relief bill made contractors eligible for unemployment assistance during the coronavirus pandemic. But a variety of obstacles — including the difficulty of bringing state unemployment systems up to speed and strict eligibility guidelines from the Labor Department — have left most ride-share drivers and other gig workers unable to take advantage so far.
Few states appear ready to process applications from gig workers, and some are turning them away. Critics have also expressed concern that guidance from the Labor Department issued over the weekend may be excluding workers who should qualify.
The guidance appeared to leave out drivers who could theoretically choose to work on any given day but are not doing so because few passengers are requesting rides. It also appeared to exclude certain workers who choose not to work because they are at a high risk from the coronavirus.
A Labor Department representative said the situations laid out in the guidance “are not exhaustive, and we expect many ride-share workers to be eligible.” The two big ride-hailing companies, Uber and Lyft, also said they expected many drivers to qualify.
One week after the first of the month, tenants are struggling with rents.
The National Multifamily Housing Council, a trade group for big apartment owners and developers, compiled data tracking rent payments across some 13.4 million units nationwide. It showed that through the first five days of April, 31 percent of tenants had so far failed to pay their rent, compared with 18 percent in the same period a year ago.
“It’s only going to get worse,” said Bruce Brunner, a Minneapolis landlord. Of his 130 tenants, two dozen have been laid off or had their hours cut.
The $2 trillion CARES Act, signed by President Trump on March 27, should in theory help laid-off tenants keep up with the rent through expanded unemployment insurance benefits and one-time stimulus payments.
But much of the aid is directed to those already attached to some government program — like tenants who live in subsidized or public housing or landlords with mortgages backed by federal agencies.
Here’s what you need to know about coronavirus relief for small business.
The federal stimulus bills enacted in March, including a $2 trillion economic relief plan, offer help for the millions of American small businesses affected by the coronavirus pandemic.
Cash grants. Low-interest loans. Payments to offset some payroll costs for businesses that keep or rehire workers. There are also enhancements to unemployment insurance and paid leave.
Here are the answers to common questions about these programs. And we will update this article as we learn more about the details.
More information on help, including details on the stimulus checks that many people will be receiving, can be found in our F.A.Q. for individuals about stimulus relief and our Hub for Help. If you have questions, or have applied for small business aid and can tell us how the process went, we’d love to hear from you.
Catch up: Here’s what else is happening.
Nordstrom, one of the country’s best-performing department stores, said in a Wednesday filing that it did not have a “firm date” on when its stores would reopen. Most of the company’s work force — about 69,000 people, according to a separate filing — has been furloughed “or assigned zero hours of work.” Nordstrom has also temporarily closed its headquarters in Seattle.
Airbus, the European aerospace giant, said it was cutting production by about a third in response to the reshaping of the aircraft market. “Our airline customers are heavily impacted by the COVID-19 crisis,” Guillaume Faury, Airbus’s chief executive, said in a statement. “We are actively adapting our production to their new situation.”
The London-based Jewish Chronicle, one of the oldest Jewish newspapers in the world, said on Wednesday that it would cease publication after being crushed by the financial impact of the coronavirus pandemic. Founded in 1841, The Chronicle claims to be the oldest continuously published Jewish paper in the world.
Reporting was contributed by Emily Flitter, Ana Swanson, Stacy Cowley, Karen Weise, Noam Scheiber, Liz Alderman, Jack Ewing, Sapna Maheshwari, Conor Dougherty, Niraj Chokshi, Adam Satariano, Choe Sang-Hun, Jack Nicas, Ceylan Yeginsu, Austin Ramzy, Mohammed Hadi, Matt Phillips, Katie Robertson, Carlos Tejada and Amie Tsang.