The other two federal bank regulators — the Federal Reserve and the FDIC — have not made similar statements, and Fed Chair Jerome Powell has warned that a second outbreak of the virus could harm public confidence and cause even greater economic pain.
Brooks, a former business associate of Treasury Secretary Steven Mnuchin, cited as a potential downside “certain cities’ initiatives to cut off water, electric or other utilities” to businesses operating in violation of lockdown orders.
“Banks are a major source of commercial real estate finance in the United States,” Brooks said. “Cutting off utilities to commercial buildings can impair their condition, structural integrity, and value, thus impairing the collateral that secures real estate loans.”
“While some cities and states are reopening their economies, others reportedly are extending their lockdown orders for weeks or even months,” he added. “Such essentially indefinite requirements that businesses remain closed increases other risks to properties securing bank loans. Risks include being vandalized and burglarized because of extended lack of occupancy.”
Brooks also cited “small-business loan delinquency rates in the mid-double-digits” on loans that were previously rock solid.
He also said banks have historically not allowed customers to wear face masks because they increase the risk of robberies and said recent reports of robberies at bank branches and other companies “make clear that broadly applicable face mask requirements are not safe or sustainable on a permanent basis.”
Brooks‘ predecessor, Joseph Otting, stepped down Friday after his agency finalized the overhaul of a landmark anti-redlining law. Both men used to work at OneWest Bank, an institution once co-owned by Mnuchin.