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How Cash-Hungry Firms Could Bite $700 Billion Out of Banks (1)

March 18, 2020, 12:52 PM

What if companies across America pull harder on credit lines during this crunch than they did in the last one?

During the depths of the 2008 financial crisis, companies served by U.S. banks bolstered themselves by drawing about 30% of their available credit, with some sectors going much further. If five industries now getting hammered by the coronavirus and oil-price slump were to, say, draw as much as 70%, all corporate clients together would extract a total of about $700 billion from the six biggest banks’ liquidity pools. That’s close to 16% of lenders’ cash-like holdings at the end of ...