Commercial lending

Billions were lost to fraud during PPP. Now, prosecutors are increasing efforts to recoup taxpayer money, leaving lenders worried they could be put under the microscope next.

Despite growing concerns about fraud, bankers and credit union lenders say PPP provided a crucial source of capital, backstopping the economy as it faced an unprecedented challenge from the pandemic.

Federal Reserve lending data released Friday showed that bank lending declined by the greatest level ever during the end of March, an indicator that credit conditions are worsening.

Lenders are bracing for more companies to fall behind on their loan payments. That could create more opportunities for banks to dispose of these nonperforming credits through an Article 9 sale.

Rising vacancy levels, soaring interest rates and weaknesses exposed by recent bank failures have analysts and investors worried about banks' outsized exposure to high-rise office, apartment and retail properties.

The regulation — mandated more than a decade ago to combat discrimination — will make lenders provide data on approvals and denials of small-business loan applications, the cost of credit and demographics of borrowers.

Lenders had started tightening as early as the fourth quarter in anticipation of a possible recession. Now, the banking crisis is driving community and regional banks in particular to hit the brakes harder, stoking renewed recessions fears.

The Consumer Financial Protection Bureau plans to issue a small business data collection rule this week, more than a decade after it was mandated by the Dodd-Frank Act to collect data on all small business credit applicants.

Banks with strong underwriting and stress testing should be well positioned to survive the credit and liquidity issues that may come while being able to continue to serve customers.

The $1.25 trillion-asset Home Loan Bank System collectively issued $303.9 billion in discount notes and bonds last week, with demand tapering dramatically from $111.8 billion on Monday to $21.7 billion by Friday.

The system of 11 regional banks issued a combined $137 billion of bonds and discount notes on Tuesday and Wednesday, after selling $112 billion on Monday, the largest single day of issuance in its 90-year history.

Analysts are increasingly focused on rising office property vacancy rates, driven by remote-work trends and higher costs of living. They are worried that cash-strapped landlords could default on loans and cause losses in banks' CRE portfolios.

René Jones explained to shareholders how breakdowns occurred following the bank's acquisition of People's United Financial. An analyst called the remarks a "big mea culpa."

About 40% of smaller firms applied for private-sector financing last year, which was up from 25% in 2021, according to a survey by the Federal Reserve banks. The results suggest a return to pre-pandemic credit needs, but borrowers now have different plans for the use of financing.

The New York megabank unveiled the most complete accounting to date of its carbon footprint, and pledged to further reduce emissions from various high-emitting industries. Climate activists offered a mix of praise and concern.

The small businesses said in a lawsuit that the bank used "misleading marketing and business practices" to rake in processing fees from oversized Paycheck Protection Program loans. A bank spokesperson placed responsibility on PPP borrowers for the representations they made in loan applications.

The rise of e-commerce during the pandemic has fueled demand for warehouse space as companies look to move their products closer to their customers. While a slight slowdown is now under way, bankers still see plenty of business ahead.

Octaura, an electronic portal backed by seven global banks, completed its first syndicated loan trades earlier this month.