Wells Fargo CEO: ‘Hard to Avoid’ a Recession

Speaking at an event, Wells Fargo CEO Charlie Scharf said it’s almost a given that the U.S. is heading for an economic downturn, The Wall Street Journal reported Tuesday (May 17).

The Federal Reserve has raised rates twice this year to try and cool the economy and stop inflation, but higher rates have pushed up borrowing costs for mortgages and credit cards and other loans. Because of all of that, Scharf said it’s going to be “hard to avoid some kind of recession.”

Despite this, Scharf doesn’t think consumers and businesses have been doing so bad. He said lots of peoples’ economic strength would hopefully render a recession “short and not all that deep.”

He added that some of cryptocurrency’s underlying tech could make a difference, changing how payment systems and loans function. However, he said it would be tough to determine the value of crypto itself, which has fallen drastically this year.

Scharf also said it may not be necessary to use intermediaries to deal with things like decentralized finance (DeFi), though it wouldn’t replace the larger financial economy. Banks are often a kind of proxy for the larger economy, with concern about the tightening hurting economic growth doing damage to bank stocks.

Last month, Wells Fargo debuted a new “Small Business Resource Navigator,” which will help small business owners complete questionnaires to help connect with the right community development financial institutions, or CDFIs.

See also: Wells Fargo Debuts 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 the CDFIs are an important part of the ecosystem, allowing smaller businesses to get capital or other things they can’t through the traditional financing.