Fed Issues New Bank Guidance to Improve Main Street Loan Access
By Nick Timiraos
The Federal Reserve issued new guidance to banks Friday in an
effort to improve access to new business loans through its $600
billion Main Street Lending Program.
The Fed is relying on banks to underwrite loans to qualified
small and midsize businesses under the novel effort to reach firms
that aren't large enough to access corporate funding markets, which
the central bank has also backstopped.
The Fed is trying to encourage banks to make loans that might
not otherwise be made to support businesses through the coronavirus
pandemic. The program has faced limited uptake since the Fed began
purchasing loans in July, with some banks saying they are selling
95% of eligible loans to the Fed because of concerns over how
regulators might treat loans to firms whose revenues have been
significantly harmed by the pandemic.
In response, the central bank said Friday it had agreed with
bank regulators at the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation to clarify that
federal examiners will provide more flexibility in evaluating loans
originated under the Main Street program.
Write to Nick Timiraos at firstname.lastname@example.org
(END) Dow Jones Newswires
September 18, 2020 13:38 ET (17:38 GMT)
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