This is the Cato Daily Podcast for Saturday, March 14, 2020.

I'm Caleb Brown.

As many individuals and businesses face a short-term cash crunch

as Americans do the right thing and enter a voluntary quarantine, banks that

are seeking to provide assistance would no longer face certain regulatory scrutiny for doing

so. On a broader level, however a leading presidential

candidate and a former Secretary of Labor seem hopelessly confused about a key

difference between liquidity and solvency. Cato's Diego Ziluaga, isolated in his home, offers his thoughts.

As this coronavirus crisis takes hold, a lot of public services have said, well, we're not, we're going to stop water

shutoffs.

A lot of New York has just implemented a measure to end evictions at least temporarily.

What guidance do banks have with respect to individuals who are cash-strapped in this environment?

Well, yesterday, two of the main banking regulators, the Office of the Com controller of the currency and the Federal Deposit

Insurance Corporation, issued guidance telling banks that if they decide to forbear debt, to delay

payments on debt, to suspend certain fees or waive them in the context of the

coronavirus crisis, that bank examiners won't look as scans at the kind of behavior that they won't

consider it endangering banks balance sheets.

And that was meant to reassure banks that I think are looking to help consumers who are increasingly

facing liquidity issues and potentially in the future may face

solvency issues at least some of them as a result of income shortfalls, emergency expenses

and various other life circumstances that emergency expenses that are shocks that

that are shocks that weren't predicted before the outbreak.

...