Mayra Rodríguez Valladares has been quoted in numerous publications in the US, Europe, Asia, and Latin America.
Banks should have prepared investors for potential dividend cuts on their own through a “massive public relations” campaign, said Mayra Rodríguez Valladares, managing principal at the consulting firm MRV Associates. While JPMorgan Chase & Co. CEO Jamie Dimon has mentioned scenarios under which the country’s largest bank would consider suspending dividends, other major banks have yet to publicly prepare shareholders for that possibility. The longer they wait, the more likely investors “will be shocked and punish” their stocks if they do cut their dividends, Rodríguez Valladares said.
Minority-owned banks tend to serve people in communities where jobs have been hit hard by the pandemic, says banking consultant Mayra Rodriguez Valladares at MRV Associates. “And so they’re withdrawing deposits from the banks. And so what that means is that the banks don’t have enough money to lend,” she said. By purchasing a loan from a bank’s balance sheet, Citi is giving the minority-owned lender capital in return. Valladares says that can help those lenders issue more loans than they otherwise could with their own deposits. “And really, right now, it’s critical to be making loans to as many people as possible,” she said.
“I think it will be closer to a depression than a regular recession,” said Mayra Rodriguez Valladares, a managing principal at the financial consulting and research firm MRV Associates. Rodriguez Valladares sees evidence that the nation is heading toward something similar to the Great Depression based on the millions of jobs lost over the past few weeks. “What we’re seeing right now is closer to the Depression than it was in the 2008 financial crisis,” she said. Rodriguez Valladares foresees workers not quickly returning to their old jobs after the economy eventually rebounds. “When people are fired … they are not immediately brought back. They’re not redeployed, and some may never come back,” she said, adding, “I think we are going to be in a recession for several quarters, and then, recovery will be slow.” Rodriguez Valladares reasoned that the current crisis developed so quickly that there was little data that companies could depend on to prepare, shore up resources, and save jobs. Instead, companies find themselves financially vulnerable as they try to survive the economic shutdown.
Others worry that bank lobbyists may use the coronavirus crisis to push their own agenda forward. “This postponement should make us wonder whether banks are indeed as wellcapitalised as lobbyists have been saying they are for the last few years,” said Mayra Rodriguez Valladares, managing principal at risk consultancy firm MRV Associates. “I’m very concerned that when the pandemic finally ends, they will take advantage of the situation to request further delays and ease on bank capital and leverage requirements. Regulators should be requiring more from banks, not less.”
“Thus far, banks have not made changes to lines that are already approved,” says Mayra Rodriguez Valladares, a banking regulation and capital markets consultant. “If they were to do that, it would be outrageous given that companies need liquidity more than ever to keep people employed.” However, “if this crisis intensifies, banks certainly will raise rates and shorten maturities for new lines before they approve them.”
Mayra Rodríguez Valladares, managing principal of MRV Associates, said community banks may be better at getting those loans out the door than the big guys. “They don’t have huge staffs, they don’t have a lot of red tape,” she said. “Community banks — their specialty is indeed taking deposits and lending.” For the Paycheck Protection Program, regulators temporarily loosened rules on how much money banks have to keep in reserve to cover bad loans, Rodríguez Valladares said. And banks are already lobbying to make those changes permanent.