While the coronavirus crisis expands both physically through the population and fiscally into the stock market, shutting down businesses and hiking unemployment numbers, the federal government is racing to pull together a $1 trillion package to prevent complete financial collapse.
Meanwhile, local community bankers are huddling to pull together their own plan for immediate relief to Galveston County businesses and individual customers.
“I think in Galveston right now, it’s more important what local banks are doing,” said Jimmy Rasmussen, president and CEO of HomeTown Bank with locations in Galveston, League City and Friendswood.
“We’re getting together and doing something similar to what we’ve done before after hurricanes Ike and Harvey,” Rasmussen said.
A powwow late Wednesday among Rasmussen and other local bankers is likely to result in an agreement to offer short-term lines of credit at preferential interest rates to qualified borrowers, to offer loan extensions for existing customers and to discuss paying interest only on loans for a time or skipping payments while income is limited or nonexistent.
“We’re still in the process of finalizing the details,” Rasmussen said.
Matt Doyle, mayor of Texas City and chairman of the board of Texas First Bank, said his bank would do what it could to help its customers get through the crisis as well.
Coronavirus-related business closures have been particularly hard on Galveston’s local economy, which depends on restaurants, bars, cruise ships, entertainment venues and hospitality workers to support tourism. Many employees have been suddenly shut out of work for an undetermined length of time, interrupting their ability to pay bills and be active consumers, while businesses suffer from negative cashflow.
Restaurants have cut back service to strictly takeout, delivery and drive-through business in Galveston as of Wednesday and La Marque as of today.
“What’s most needed now is let’s just get through the first few weeks and months,” said Vic Pierson, president and CEO of Moody National Bank, headquartered in Galveston with branches in Dickinson and Seabrook.
“Most business owners are concerned because their cash flows went to just about nothing,” Pierson said. “Food service, bars, all those businesses can’t operate fully and can’t generate cash flow. We’ll be working with all our borrowers to get out of this crisis. We’ll get through it and I’m sure we’ll get back to a new normal.”
Harris “Shrub” Kempner of Kempner Capital Management is more focused on the effects of the coronavirus crisis on the stock market than on local businesses but lauded efforts of local bankers to offer relief to their customers as a good first step.
“This crisis is unlike anything anybody’s ever seen because it’s worldwide and because it affects supply and demand simultaneously,” Kempner said.
Fiscal actions locally are key to curbing the effects of loans being called into question, and the federal government’s fiscal package will help at the national level with a trickle-down effect, he said.
But the fear factor surrounding the coronavirus crisis must be tackled for any progress to be made, he said.
“We’re going to have to break the perception that everyone’s going bankrupt, not just everyone’s going to get the disease,” he said.
For that to happen, progress must be made combating the virus, he said.
Without progress on both the economic and health care fronts — stimulus and relief programs that work as well as prompt and effective testing and treatment for the disease — public confidence won’t be restored, Kempner said.
“Without that progress, this thing could last for a very long time and the longer it lasts, the worse the effects on the local economy” he said.