More on the Challenges of Main Street Lending

George SelginA few days ago, in response to the Fed ' s March 23rd announcement that it planned to help smaller businesses through a new Main Street Lending Program, I postedan essay here about the Fed ' s 13(b) business-lending program —a New Deal arrangement that had the same aims. Among other things, I pointed out that, thanks in part to that program ' s painstaking, slow, and highly selective application approval process, it ultimately made little difference to the businesses it was supposed to help. Yet until World War II came along, it still managed to lose plenty of money, by yielding a net return ofminus3 percent.Since then, Boston Federal Reserve Bank President Eric Rosengrenhas told Bloomberg ' s Mike McKeethat the Fed ' s new Main Street facility " is still in the design phase, " and that it won ' t be up-and-running until mid-April. " It ' s a complicated facility to appropriately scope, " he said; and the Fed " needs to make sure that banks and other organizations understand what the nature of the facility is. " The Fed seems determined to avoid the fate of the SBA ' s complementary, $350-billion emergency lending program, which is set to launch tomorrow.According to today ' sWall Street Journal, the fact that that program ' s details have yet to be ironed-outis complicating efforts by lenders to gear up for what is expected to be an onslaught of prospective borrowers at the end of this week. Among what lenders say are the unanswered questions are how much due ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs