Using banks as a distribution channel for loans plays to the banks’ strengths.
Asking substantially all banks to spin up a new line of business in single digit weeks does not.
Asking substantially all banks to spin up a new line of business in single digit weeks does not.
“The loans are risk free. Why aren’t the banks more interested?!?”
They’re not risk-free. The government may write a put option on some of the loans.
Credit risk is far from the only risk, as the banks are keenly aware of.
They’re not risk-free. The government may write a put option on some of the loans.
Credit risk is far from the only risk, as the banks are keenly aware of.
Also note a little bit of rational “Hey, remember what happened the last time we were told ‘It is the public policy of the United States that traditional underwriting standards do not conform to our policy preferences. Adjust yours. We’ll guarantee the loans. Totes risk free.’ ?”
“Hey are we going to get backstabbed if this goes pear shaped?” “Has any American administration, much less this administration, ever blamed its failures on in someone else? Come on, where’s your patriotism.”
Unsurprisingly, Matt Levine smashed nail on head regarding reputational risk:
bloomberg.com/opinion/articl…
bloomberg.com/opinion/articl…
