Lessons from history show that those who are most disadvantaged before a disaster are likely to be most vulnerable during a disaster as well as on the road to recovery. As the novel coronavirus continues to spread, we are witnessing heavy impacts on low- and moderate-income communities as small businesses shutter, workers are laid off, and more and more households find themselves in unexpected financial circumstances. Low-income individuals and households are more vulnerable to illness and potential economic disruption for a variety of reasons, including lower availability of paid sick leave and ability to work from home, less wealth or savings to dip into in case of emergency, higher transmissibility due to larger household sizes, greater social interaction between the young and elderly, higher likelihood of underlying health conditions and weakened immune response due to toxic stress, and lack of health insurance to cover the cost of preventive doctor visits and prescriptions.
Banks play a key role in helping to alleviate the economic impacts of COVID-19 and have been encouraged to leverage their Community Reinvestment Act (CRA) activities in their response, as described in this interagency guidance from the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency. In the early days following the spread of COVID-19, the Federal Reserve Bank of San Francisco sought to understand bank response in order to share emerging and best practices for greater scale and impact across the field.
View full research brief here.