America’s biggest banks are preparing for a severe recession, the first major test of the industry’s resilience a decade after it needed billions in taxpayer bailouts.

JPMorgan Chase, the country’s largest bank and an industry bellwether, said its profit during the first quarter of this year tumbled 69 percent after it set aside $6.8 billion to cover potential losses on loans to struggling consumers and businesses. Wells Fargo set aside an additional $3.1 billion for such losses and said its quarterly profit fell nearly 90 percent.

Despite the huge drops in quarterly profits, the banks remain profitable and said they would continue to pay dividends to shareholders. That is raising concerns among industry watchdogs and lawmakers who say banks should be conserving as much capital as possible just in case the current economic downturn is deeper and longer lasting than they currently expect.

Their results offer a peek into the dire economic conditions corporate America expects to face in coming months.

“The actual level of losses we incur will be driven by how long this period lasts and the level of support the government provides,” Wells Fargo CEO Charles Scharf, said on a conference call with Wall Street analysts. “What we do know is the contraction is real.”

Banks are playing a central role in the Trump administration’s efforts to steer the economy back to health, including doling out forgivable loans to small businesses as part of the Paycheck Protection Program, a key element of Congress’s measures to buffer the economic fallout from the coronavirus.

JPMorgan Chase said Tuesday that it has funded $9.3 billion of the loans so far, the first significant sign that the program was delivering money to small business owners. The bank said it is also processing 300,000 applications seeking $36 billion in loans.

“If you just step back for a program like that to be rolled out at that speed by banks and the government is exceptional,” JPMorgan Chase chief executive officer Jamie Dimon said on a conference call with reporters Tuesday morning.

The program got off to a rocky start with several big banks, including JPMorgan Chase and Wells Fargo, unprepared to begin taking applications when it launched earlier this month. Small business owners and lawmakers have also complained that some big banks are only accepting applications from their existing customers.

The Federal Reserve lifted unprecedented constraints it put on Wells Fargo’s growth after it acknowledged a series of consumer abuses so the San Francisco bank could do more lending through the emergency small business lending program.

The bank is now “unconstrained” in processing these loans and in a position to ““help everybody who approaches us,” Wells Fargo’s chief financial officer John Shrewsberry, said in a conference call with analysts.

On Tuesday, Wells Fargo said more than 300,000 small businesses have expressed interest in applying to the program but did not indicate how much it had distributed to them.

In addition to the small business program, regulators have encouraged banks to grant homeowners temporary mortgage relief and take other steps to blunt the economic fallout from the coronavirus. Regulators have also rolled back regulations put in place after the 2008 crisis to encourage banks to continue lending despite the downturn.

American consumers were already deep in credit card debt before the coronavirus, and regulators had become concerned with companies accumulating $10 trillion in corporate debt, including a significant increase in borrowing by firms with the lowest-quality investment grade.

Since early March, Wells Fargo said it has deferred fees for more than 1 million small business and consumers.

JPMorgan Chase customers have tapped their credit lines with the bank at twice the levels they did during the Great Recession, and about 4 percent of JPMorgan’s mortgage borrowers have asked for relief, the bank said.

The extent of the bank’s ultimate losses will depend on the effectiveness of the government’s stimulus efforts, including $1,200 direct payments to millions of Americans and enhanced unemployment benefits to laid-off workers, Jennifer Piepszak, JPMorgan Chase’s chief financial officer, said in a call with reporters.

“It’s going to come down to the effectiveness of these programs,” Piepszak said. “We’re going to learn a lot more through second quarter.”

The bank’s current projections assume the U.S. gross domestic product will fall 25 percent and unemployment will rise to 10 percent in coming months. But its own economists are projecting a deeper downturn and that GDP could fall 40 percent and the unemployment rate could reach 20 percent.

Some regulators are warning that if the economic downturn drags on after years of record profits, the banking industry could be hit hard.

“People don’t pay their mortgage. Coffee shop doesn’t pay their landlord. The landlord then can’t pay the bank’s mortgage. And so it ends up rolling up into the banking sector,” Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, said Sunday on “Face the Nation.” “If this goes on long enough, it could produce strains in the banking sector. And then the Fed and Congress and Treasury would have to step in to make sure that the banks are sound.”

The industry has rushed to head off those concerns. Last month, the country’s eight largest banks said they would temporarily stop buying back their own stock, which lifts their share prices but taps capital they could use to offset loan losses.

But the industry does not appear willing to stop paying shareholder dividends. Among America’s biggest banks, JPMorgan Chase and Wells Fargo have paid out the most in dividends to shareholders since 2008, about $80 billion each, according to S&P Global Market Intelligence data. Bank of America and Citigroup paid out about $52 billion and $30 billion, respectively, during that period.

For bank stocks, generous dividends can account for 15 percent to 20 percent of the total return for shareholders, said Ken Leon of CFRA. “That is where they are drawing a strong line,” he said. “A lot of investors own those stocks for those dividends.”

But that could be dangerous, industry watchdogs say. “The only thing that stands between a viable bank and a failing bank is its capital cushion,” said Dennis Kelleher, president of Better Markets, a nonprofit group that advocates for stronger financial regulation. “It is irresponsible not to conserve the maximum amount of capital possible.”

JPMorgan Chase and Wells Fargo executives both said they would continue to review their dividend plans but saw no immediate reason to hold off. Dividends are important to shareholders, said Wells Fargo’s CEO Scharf. “If they [companies] have ability to pay, it’s the right thing to do,” he said.