Receiving Wide Coverage ...
Worse than 2008?
Besides the coronavirus pandemic, “there’s another threat to the economy,” an article in The Atlantic warns. “It lurks on the balance sheets of the big banks, and it
“You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse.”
But the Wall Street Journal
“By a number of measures, CLOs are under stress due to the coronavirus pandemic. However, the most-senior debt sold by CLOs is protected from principal loss in a number of ways, including a threshold for how many loans rated triple-C—a low ratings tier—the CLO can own. The immediate question for most people is what risk there is for big institutions like banks, pension funds and insurers that own the most-senior CLO debt. For now, the defensive terms within CLO structures appear to make the risk of permanent loss to them from the current economic stress remote.”
Financial Times
Sturm und Drang
Deutsche Bank is warning that “its
“Our expectation would be that credit loss provisions will be in a range around €800 million for this quarter,” CFO James von Moltke told analysts at Goldman Sachs’ European Financials Conference. That would be “up fivefold from a year ago.” However, von Moltke added that “we would expect that the second quarter will be the peak of the loan loss provisioning for this year,” followed by an improvement in the second half.
Meanwhile, Commerzbank, Germany’s second-largest bank, is
“In a confidential letter sent to the bank’s chairman Stefan Schmittmann, which was seen by the Financial Times, the private equity firm argued that ‘swift and decisive action now”’ was required to stop a ‘downward spiral’ caused by bloated costs, low profits and managerial inaction. It called for ‘significant change at the supervisory board, the management board and the company’s strategic plan.’” Commerzbank declined to comment.
New York Times
Moving target
More than $130 billion remains available in the Paycheck Protection Program as “small businesses have grown more wary of taking the money. Even more striking was the fact that on many days last month, more money was being returned than borrowed, highlighting its messy execution and confusing rules that deterred some small businesses from using the money.”
Changes “Congress made to the program last week to make it less restrictive … could help the remaining $130 billion move faster. But having the terms of their loans revised on the fly yet again — which has happened repeatedly since the program began in April — is
“Senators from both parties signaled support for
Elsewhere
Getting ready
American banks “have been stocking up on masks and other supplies and setting up acrylic barriers to prevent spreading the novel coronavirus as they
“Bank of America has installed over 20,0000 acrylic barriers across branches to prepare for more foot traffic as shelter-in-place orders ease, spokesman Matt Card said. The bank requires employees to wear masks, and has stockpiled enough so that each employee receives one a day, he said. Capital One is also installing barriers, enhancing deep cleaning protocols, placing social-distance markers for queuing and providing hand sanitizers and masks, said spokeswoman Devon Gunn. It will also provide masks to customers if they arrive without one, she added.”
Justice fund
Goldman Sachs said it “launched a $10 million fund to support the work of organizations
“An email by a Goldman employee about his experiences of racial injustice and criticizing managers at the Wall Street bank for not supporting junior bankers from diverse backgrounds went viral at the firm last week,” Reuters said.
App warning
The FBI warned Wednesday that hackers are “
