Speaking at an event, Wells Fargo CEO Charlie Scharf said it was almost a given that the United States was heading for an economic downturn, The Wall Street Journal reported on Tuesday (May 17).
The Federal Reserve has raised rates twice this year in an attempt to cool the economy and halt inflation, but higher rates have pushed up borrowing costs for mortgages, credit cards and other loans. Because of all this, Scharf said it would be “difficult to avoid some kind of recession.”
Despite this, Scharf doesn’t think consumers and businesses are faring so badly. He said the economic strength of many peoples would hopefully make a recession “short and not so deep”.
He added that some of the underlying cryptocurrency technologies could make a difference, changing the way payment and lending systems work. However, he said it would be difficult to determine the value of the crypto itself, which has fallen significantly this year.
Scharf also said there might not be a need to use intermediaries to run things like decentralized finance (DeFi), though that wouldn’t replace the wider financial economy. Banks are often something of a proxy for the economy as a whole, with concerns about the crunch hurting economic growth and hurting bank stocks.
Last month, Wells Fargo launched a new “Small Business Resource Navigator,” which will help small business owners fill out questionnaires to connect with the right community development financial institutions, or CDFIs.
See also: Wells Fargo Launches Small Business Financial Assistance Portal
“As the uncertainties of the COVID-19 pandemic persist, small businesses continue to need our help,” Derek Ellington, head of small business at Wells Fargo, said in a statement. “We see a lot of value in supporting a resource like this to help small businesses connect to as many options as possible.”
Ellington said CDFIs are an important part of the ecosystem, allowing small businesses to get capital or other things they can’t through traditional financing.