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Coronavirus !!! Very Political Thread !!!

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palmab03 said:
Because their only expenses will be slightly higher staffing and overtime costs, so they will realize 8.5 million in profit off that $9 million in revenue. It's not like their rent is going up.
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And what will be the default rate on these loans - many of which will be interest free? Do they hold the same overall risk profile as loans when there isn't a global pandemic of unknown duration taking place? Are they fully insured by the Federal government? Do bank employees count as real "jobs"?

Do you really believe the margin on an interest free loan with a 3% origination fee is around 90% - as you've suggested?
 
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BiffTannen said:
Yeah, my thought as well. Combine that with the fact that they're not generating much revenue in general right now.
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Put another way, they've got about $1.2 billion in assets, $60 million in revenue, and so this alone is like 15% of their revenue. Yes I'm aware they'll likely see a big drop in underperforming loans, but they also got the fed funds rate down to 0% so their spread is increasing. This was a pseudo bank bailout in disguise. 3% is a LOT for a loan origination fee. Usually it's 1%. And the application forms are literally 2 pages long.
 
DeacMan said:
And what will be the default rate on these loans - many of which will be interest free? Do they hold the same overall risk profile as loans when there isn't a global pandemic of unknown duration taking place? Are they fully insured by the Federal government? Do bank employees count as real "jobs"?

Do you really believe the margin on an interest free loan with a 3% origination fee is around 90% - as you've suggested?
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The banks aren't on the hook for any defaults, they're all SBA loans. The banks are just the middle men.
 
In otherwords, during this loan process there was absolutely nothing involved with underwriting the borrowers' ability to repay the loan, because it's not intended to be repaid. It's a gift to the business if it's spent on payroll. The only information they've requested is the number of employees you have and what your average payroll was, what your rent is, and what your utility expenses are.

That's it.
 
palmab03 said:
Because their only expenses will be slightly higher staffing and overtime costs, so they will realize 8.5 million in profit off that $9 million in revenue.
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Please let me know where I can invest in a business that drops 94% of an increased seven figure revenue stream to the bottom line.
 
palmab03 said:
The banks aren't on the hook for any defaults, they're all SBA loans. The banks are just the middle men.
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Not necessarily. If we screw something up with the administration of the program we’ll be on the hook.
 
aren't the loans forgivable for all expenses related to salary, rent/mortgage, and benefits

and guaranteed by the feds?
 
palmab03 said:
In otherwords, during this loan process there was absolutely nothing involved with underwriting the borrowers' ability to repay the loan. The only information they've requested is the number of employees you have and what your average payroll was, what your rent is, and what your utility expenses are.

That's it.
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That’s not true. It’s not a full “underwriting” of the credit risk but the banks are being asked to review and verify the information submitted by borrowers. We’ve taken in 15k applications this morning totaling ~$5B in credit requests btw.
 
JuiceCrewAllStar said:
aren't the loans forgivable for all expenses related to salary, rent/mortgage, and benefits

and guaranteed by the feds?
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At a high level, yes. But the banks have been asked to take on quite a bit of admin in the origination and forgiveness phase that opens us up to quite a bit of potential risk.
 
Colonel Angus said:
Please let me know where I can invest in a business that drops 94% of an increased seven figure revenue stream to the bottom line.
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Let's put it another way. The entire banking industry profited $57 billion last year. $350 billion dollar program, 3% origination fee is $10 billion dollars. And the treasury department wants the funds to be gone in a week.
 
like, a bank is on the hook 100% for a defaulting loan if you mis-enter someone's tax ID number or something?
 
WRS said:
That’s not true. It’s not a full “underwriting” of the credit risk but the banks are being asked to review and verify the information submitted by borrowers. We’ve taken in 15k applications this morning totaling ~$5B in credit requests btw.
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That's true, I suppose they do already have our financial statements. So in this case, the bank does "know" us already.
 
Everyone realizes that these simplistic graphs are based off bad data and many confounding factors correct.
 
WRS said:
That’s not true. It’s not a full “underwriting” of the credit risk but the banks are being asked to review and verify the information submitted by borrowers. We’ve taken in 15k applications this morning totaling ~$5B in credit requests btw.
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I get that

but what are the penalties relative to the mistakes?
 
WRS said:
That’s not true. It’s not a full “underwriting” of the credit risk but the banks are being asked to review and verify the information submitted by borrowers. We’ve taken in 15k applications this morning totaling ~$5B in credit requests btw.
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The HORROR...asking a bank to do its own due diligence before handing out money.
 
RJKarl said:
The HORROR...asking a bank to do its own due diligence before handing out money.
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I’m not complaining, just making people aware of what we have been asked to do. It’s not our money but we are bearing some risk and there is little to gain from a financial perspective. We have had to make the decision to only accept applications from clients that have existing credit relationships with us due to these standards which unfortunately will exclude a decent portion of our relationships. Other banks have had to make similar decisions to only accept applications from its existing client base that meets certain criteria.
 
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