The Fed lifts a Wells Fargo’s 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, and the bank calculated it could handle up to $70 billion in loans under the program but the growth cap limited to a volume of just $10 billion. 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.
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.
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.
France suffered the worst quarterly contraction in growth since the aftermath of World War II as the impact of the coronavirus froze activity across large swaths of the economy and consumers locked indoors slashed spending, the French central bank reported Wednesday.
Economic output shrank by an estimated 6 percent from January through March, and is shrinking by around 1.5 percent for every two weeks that the population remains under confinement, the Bank of France said. Prime Minister Édouard Philippe said on Tuesday that France’s lockdown would be extended beyond an original April 15 deadline, without specifying a date.
Similarly grim data was released in Germany, where the gross domestic product is expected to shrink almost 10 percent from April through June, five leading economic institutes said Wednesday in a report prepared for the German government. That would be the biggest decline since quarterly record-keeping began in 1970, the institutes said.
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.
As governments around the world look ahead to lifting the lockdown orders now in place to halt the spread of the coronavirus, mobile apps are seen as playing an essential role in tracking the movements of those who are infected.
Yet one of the biggest challenges in deploying such technology is ensuring the apps all work seamlessly together and that different countries use tools that can share information. The apps will not do much good if they are incompatible, particularly in a region like Europe where countries share open borders.
On Wednesday, the European Union issued recommendations for countries within the 27-nation bloc to build contact-tracing apps with common technical standards.
Already, apps are being used or developed in Britain, France, Germany, Poland and elsewhere. Some are being created in collaboration with governments, while others are being built by private companies and research groups.
“A fragmented and uncoordinated approach risks hampering the effectiveness of measures aimed at combating the COVID-19 crisis,” the European Commission said in a 12-page document.
An added challenge is building these tracking apps without violating people’s privacy rights. Many privacy-rights groups have raised concerns about overly-intrusive measures being used to fight the virus.
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.
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.
With much of the world under lockdown and looking to kill time, jigsaw puzzles have taken on a new role: a tool to save humanity. Australia’s prime minister even referred to jigsaws as essential and allowed people to leave the house to buy them.
The rush to get hold of a jigsaw puzzle has transformed this quiet hobby and put companies under pressure as demand surges.
Ravensburger, a German puzzle maker with global sales of about $600 million a year, has been trying to meet the sudden blizzard of orders even as social-distancing measures have limited the number of puzzles it is able to produce.
The company can’t easily ramp up production, because each new puzzle takes weeks to create.
Each puzzle piece must be uniquely shaped, to avoid one accidentally fitting into the wrong place. That means 1,000 different shapes for a 1,000-piece puzzle, each drawn by hand. Before a puzzle is cut for the first time, each piece is sketched on a sheet of paper draped over the finished image.
South Korea announced a new 36 trillion won — or $29.5 billion — stimulus package on Wednesday aimed at cushioning its export-driven economy from the impact of the coronavirus pandemic.
The new package added to a series of economic rescue measures totaling more than $80 billion that South Korea has announced in recent weeks to shore up its battered economy and help self-employed people and small- and medium-size businesses that have been hit the hardest.
The package announced on Wednesday will come in the form of cheap loans for the country’s exporters.
During an emergency meeting of senior economic policymakers, President Moon Jae-in said his government had also drawn up new measures worth 17.7 trillion won, or about $14.5 billion, to boost domestic consumption. He didn’t provide details.
“The global economy is being sucked into a severe depression and, as a result, our economy, heavily dependent on the external conditions, is facing a tsunami-like shock,” Mr. Moon said. “This is a tunnel, the end of which we cannot see yet.”
Mr. Moon revealed the new stimulus package as political parties in South Korea were campaigning for a crucial parliamentary poll next Wednesday. His governing Democratic Party had once appeared to face a tough campaign as Mr. Moon’s diplomacy with North Korea remained in a stalemate and discontent over a slowing economy deepened.
But the approval ratings of Mr. Moon and his party have been on the rise in recent weeks as South Korea was praised by other nations for its effective handling of the epidemic.
South Korea has aggressively deployed test kits and other disease-control resources to isolate patients and contain the virus. The number of new cases, once as high as 813 on Feb. 29, has dropped to around 50 in the past three days. The country had recorded a total of 10,384 coronavirus cases as of midnight Tuesday, with 200 deaths.
Catch up: Here’s what else is happening.
Jack Dorsey, the chief executive of Twitter and Square, said that he planned to donate $1 billion, or just under a third of his total wealth, to relief programs related to the coronavirus pandemic.
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.
California struck a deal to secure nearly 200 million masks a month for health care workers, Gov. Gavin Newsom said late Tuesday. A spokesman for Mr. Newsom said the state would purchase the masks from overseas manufacturers in two separate deals with a California nonprofit and a California company, but did not provide further details.
Reporting was contributed by Ana Swanson, Stacy Cowley, Noam Scheiber, Liz Alderman, Jack Ewing, Conor Dougherty, Adam Satariano, Choe Sang-Hun, Jack Nicas, Ceylan Yeginsu, Austin Ramzy, Katie Robertson, Carlos Tejada and Amie Tsang.