The prospect of a government backed stimulus to ease the financial woes brought on by the coronavirus pandemic led to a rebound in mortgage real estate investment trusts. Mortgage REITs are facing funding challenges and some are selling assets.
The coronavirus pandemic could lead to credit card losses for banks as consumers struggle to pay their bills. A $2 trillion stimulus package under consideration by Congress may give banks a way to work with consumers but some could still face large write-offs.
An S&P Global Ratings analysis finds banks' worst-case scenario during the coronavirus pandemic would entail a complete loss of profits. A more favorable forecast, which limits the impact to certain sectors that include travel and leisure, would entail profits roughly being cut in half.
Small banks already challenged by low interest rates will face more hurdles due to the coronavirus pandemic. Regional banks could face more loan losses and reduced revenues, analysts say.
The belief that US Treasurys are the safest place to invest is being challenged by recent market activity. Wild market swings and a rush toward cash have called the conventional wisdom into question.
Some banks like Boston's Eastern Bank are offering small-dollar loans to consumers while other banks are offering credit cards to help consumers get through the coronavirus pandemic. Many banks are waiving fees and offering deference on some loans.
A study by a group of academics finds there was a surge in the profitability of insider trading during the 2008 global financial crisis and the government bailout that followed. "Anytime the government picks winner(s) and losers, there is a greater opportunity for insider trading by connected individuals," said Wharton professor Daniel Taylor, who co-authored the report.
A bill proposed by Sen. Sherrod Brown, D-Ohio, would require banks to allow unbanked consumers to set up a free account to receive stimulus checks. The "Banking For All Act" would keep consumers from cashing their checks at businesses that might require fees, Brown said.
The $2 trillion coronavirus relief package under consideration by the House will delay the Current Expected Credit Losses standard until Dec. 31 or the day the national emergency declaration expires. Banks would also be able to designate some loans as troubled debt restructurings.