The Deep and Essential Connections Among Markets, Businesses, and Workers and the Importance of Maintaining those Connections in our Fight Against COVID-19

Over the past several weeks, my colleagues at the SEC, other regulators, elected officials, market participants and others have asked my views on the functioning of our capital markets, and the importance of those markets, in the context of our fight against COVID-19.[1]  In response, I have stated that, to the extent possible, our markets should function through challenging and uncertain economic times.  In certain cases, I have elaborated on the basis for my views.  Because we are being called upon to make various decisions and provide advice to other decision makers in response to COVID-19, I believe it is appropriate to share broadly my perspective on our ongoing efforts to navigate this complex national challenge.     

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The Securities and Exchange Commission and other financial regulators are focused on two overriding and interrelated issues.  First, we are facing an unprecedented national challenge—a health and safety crisis that requires all Americans, for the sake of all Americans, to significantly change their daily behavior and, for many, to make difficult personal sacrifices.  Second, the recognition that the continuing, orderly operation of our markets is an essential component of our national response to, and recovery from, COVID-19. 

The interrelationship between these issues cannot be overstated.  Our health care, pharmaceutical, manufacturing, transportation, telecommunications and many other private-sector industries are critical to our collective response to COVID-19.  The thousands of firms and entrepreneurs in these industries — and the millions of employees and contractors — that are working around the clock to fight COVID-19 depend on continued access to payments and credit.  More specifically, each hospital system, personal protective equipment manufacturer, trucking company, grocery chain, gas station and cleaning service must make and receive countless payments.  In the vast majority of cases, these payments—and the confidence that they will be received—depend on the provision of credit from our banks and our capital markets which, in turn, depend on flows of capital more generally.

This dynamic between consumers and essential industries, on the one hand, and financial services and markets, on the other hand, does not stop with the private sector.  Many state and local governments, who play pivotal roles in the provision of health care, transportation, and public services, including  supplying our doctors, nurses, first responders and other heroes on the front lines, depend on continued access to financing through our banking system and the municipal finance markets.     

The importance of market function in this time of collective commitment goes beyond our health care, pharmaceutical and medical research activities.   To most effectively respond to COVID-19, as we shift vast resources to our healthcare and related industries to address those in need, we are simultaneously pulling back from many other businesses and industries to limit those who will be in need.  Air transportation, lodging, restaurants and live entertainment are among the industries most acutely affected.  Employees and contractors in these and many other sectors, and their loved ones who depend on them, are facing hardship and uncertainty.  Today, through no fault of their own, many of these individuals and businesses will need assistance to meet rent, payroll and many other cash needs.  We all recognize the potential personal and societal fallout if these needs are not addressed and I welcome the efforts of the Administration and Congress to provide funds to workers and businesses to bridge this funding gap.  Bridging those gaps, and doing so while keeping as many workers connected to their employers as is practicable, will enhance our efforts to fight, and recover from, COVID-19.

To be sure, we also are mindful of tomorrow.  An immediate, effective response to COVID-19 requires substantial portions of our economy to function at full throttle, other sectors to function in different ways (e.g., telework) and more moderately, and some sectors to stand down.  Our markets, and our policies, should support this tailored, multi-faceted, time-limited approach.  And, just as COVID-19 has caused us to alter our economic activity by industry and region, we must, consistent with a continuing commitment to health and safety, prepare to thoughtfully and incrementally increase economic activity by industry and region.  When that time comes—and here we should take our cues from health authorities and local and national leaders—we will benefit from maintaining the continuing function of our financial markets, and preserving the interconnections among of our industries and our workers, throughout this period of shared responsibility. 

In short, preserving the flows of credit and capital in our economy – to businesses and individuals alike — will help us better fight COVID-19, as well as speed and strengthen our recovery.