WASHINGTON (Reuters) – The Federal Reserve on Monday moved to bolster a new small-business lending program by allowing banks to turn those loans over to the U.S. central bank for cash, easing concerns among banks about getting stuck holding the low interest loans. The Fed said it would announce details later this week of a new term financing arrangement for loans made under what is known as the Payroll Protection Program, part of the federal response to the economic effects of the coronavirus pandemic.
Bank of America said Monday that it’s seen fierce demand for emergency rescue loans with current applications already accounting for nearly 10% of the entire amount allocated by Congress. The bank confirmed that it has received applications from 177,000 small businesses for a total of $32.6 billion in financing. The current Bank of America numbers are its applications and do not represent the sums the Small Business Administration has approved.
Former Consumer Financial Protection Bureau (CFBP) Director Richard Cordray on Monday outlined a number of steps that the agency should promptly take to help consumers during the coronavirus pandemic. In a white paper posted on Medium, Cordray and two other former CFPB officials argued that the agency currently “has been proceeding as if it is oblivious of the new and urgent risks facing consumers.”
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The Department of Veterans Affairs plans to pause debt collection from veterans and extend benefits deadlines during the coronavirus pandemic.
The move is intended to provide relief to veterans during the crisis, VA officials said. It follows President Donald Trump‘s announcement that he had directed VA to do exactly that. Previously, members of Congress called on VA to postpone debt collection and provide flexibility for benefits claims.
Auto lenders are bracing for one of their largest hits ever because of the coronavirus.
Car loans are a significant source of revenue for credit unions, making up about a third of the industry’s $1.1 trillion in loans in the fourth quarter, according to the National Credit Union Administration’s 2019 annual report.
Because of that, the anticipated slowdown related to the current pandemic is likely to inflict a certain amount of pain on a large number of credit unions.
Consumers were slammed in the Great Recession. The CFPB’s former director warns worse could be on the way.
Cordray, who headed the CFPB under President Barack Obama and resigned in November 2017, told Vox he is particularly concerned that Americans will lose their homes and fall victim to the finance industry’s most predatory practices, just as they did during the 2008 economic crisis.
He doesn’t want that to happen again — and is pressing the CFPB’s current leadership to take action before it’s too late. Monday, he released a Medium post outlining immediate actions the bureau can take to address the coronavirus crisis and make sure the American people are protected from the myriad ways they are financially vulnerable right now.