Some banks are reportedly concerned about verification requirements and the legal exposure that might accompany their participation in the small business lending program that is one of the linchpins of the $2 trillion CARES Act. The banks are worried the speed with which the funds are to be dispersed could hamper their ability to conduct more thorough due diligence. The banks want customers to sign eligibility documents and written assurances from government officials to limit the banks' legal liabilities and obligations.
Modern Money Murmurs: This story sounds like a negotiating tactic on the part of the banks because any bank that actually decides to pull out of the rescue program would be making a grave mistake. Do the banks really want Treasury Secretary Steven Mnuchin and virtually every lawmaker on Capitol Hill taking to the airwaves to name and shame the specific banks that aren't willing to help rescue Main Street America? Do they want President Trump doing the same thing via Twitter and/or during his daily coronavirus press conferences? Sadly, such rhetoric would likely endanger the physical safety of bank employees.
Bankers have been presented with a golden opportunity to collect fees from the stimulus package AND play the role of heroes in the rescue of the US economy. Stories like this make me worry some bankers might blow that opportunity.
The Consumer Financial Protection Bureau is asking lenders to accurately report data on loan modifications and payment relief given to consumers during the coronavirus pandemic. The CFPB will give financial institutions some breathing room when settling disputes due to staffing and operational issues during the pandemic.
Online lender Kabbage has suspended credit lines to small businesses to instead help support the Small Business Association's Paycheck Protection Program, a spokesman for the company said. Some business owners said they were not given notice and were relying on the funds to help them through the coronavirus pandemic.
Standard Chartered is committing $1 billion in capital to aid companies that are providing goods and services needed to address the coronavirus pandemic. The UK bank said it will provide companies funding through loans, import and export finance, or the firms' own working capital facilities.
A proposed amendment to the Volcker rule that would allow banks to invest in venture capital firms could help the firms survive the fallout from the coronavirus pandemic. Venture capital investing is expected to decline in the next 12 to 24 months.
Finding storage space for traded commodities, particularly oil, has become one of the biggest challenges in the marketplace amid the transportation disruptions brought by the coronavirus pandemic. The cost of warehouse storage has surged, and some traders are resorting to chartering ships to hold goods like fuel oil out at sea until it can be delivered.
Ken Griffin's Citadel Securities has opened a temporary trading floor in Palm Beach, Fla., to help the trading firm continue operating at its full capacity amid disruptions from the coronavirus pandemic. The operation is contained within a hotel which has been closed to the public and will house traders brought in from Chicago and New York.
The loan application process for small businesses affected by the coronavirus pandemic has been "significantly condensed" but the "verification process the government is requiring will likely take more time than many had originally hoped," said Nick Simpson, a spokesman for the Consumer Bankers Association. Banks hope the process can be optimized by Friday as they "are working to get money out the door as quickly as possible," Simpson said.
Small businesses can apply for the $340 billion Payroll Protection Program funded by the CARES Act as soon as Friday. "Banks are ready to do everything humanly possible to support US small businesses and will continue working with SBA" to optimize the application process while following the guidance issued on implementing the program, said Consumer Bankers Association President and CEO Richard Hunt.
Citigroup is creating an online portal so that small businesses can apply for relief loans online, said CEO Michael Corbat. Almost $350 billion in loans will be available on Friday and Citigroup staffers are working "around the clock" so that they can get money in the hands of small businesses as soon as possible.
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