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re: Very big PPP development—FED will buy the loans
Posted on 4/7/20 at 7:04 am to I B Freeman
Posted on 4/7/20 at 7:04 am to I B Freeman
quote:
This is huge for lenders like Wells Fargo. They can make the loans and then sell them to the Federal Reserve freeing up their lending capacity. Just announced this evening.
Good. The whole thought that you could just throw this whole program on banks balance sheets without any issues potentially seizing up other lending was asinine. Especially at a time in which line of credit usage has skyrocketed in the corporate lending world, already stressing ratios a bit.
Combine that with the govt. punting all the fraud risk onto the banks and absolving themselves but providing their typical clear as mud guidance and requesting extremely fast turnaround with very limited underwriting and I can why some banks slow played this despite the negative PR.
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