Correspondent Blog

In past articles, we discussed a proposed Coronavirus stress test under CCAR and provided our COVID-19 probabilities of default and loss given defaults for a model bank portfolio. In this article, we update our CRE modeling and take a deeper dive into loan-level analysis in order to help banks triage and manage both individual credits…

We have blogged about checklists for returning to work and the models available to bankers to decide when to call employees to the workplace. In this article, we describe specific protocols for returning employees to a bank office, which will have no customer interaction – a much easier protocol than a bank branch reopening to…

Trading this week will once again focus on any news regarding partial economic reopenings in various states and localities. Last week, equity markets resumed their optimistic run while Treasuries assumed their more circumspect role after a mid-week softening following larger-than-expected funding plans by the Treasury. The April jobs report was every bit as bad as…

 The worst employment report in our lifetime is out and the market reaction is mixed. That’s because the May report is likely to be even worse and the range of estimates in this one were so wide that the only deeply held conviction had to be, “it’s gonna be bad.”  Also, as we’ve often mentioned…

The worst jobs report in our lifetimes will arrive on Friday but it’s not likely to evoke much of a reaction in markets, which is another sign of the strange times we are living through. With April job loss estimates above 21 million, and an estimated unemployment rate near 16%, those sobering numbers are made…

As you wind down and clean up Round 2 of the Paycheck Protection Program (PPP) and before you produce your 1502 report to the SBA, it now merits thinking about how to best set up for the wave of forgiveness work that starts immediately after funding. Obtaining forgiveness is critical to both the bank and…

This week the focus on trading will be mostly about assessing the status of the tentative economic reopenings happening in various states and localities, and a secondary eye on the wreckage that will be the April jobs report. Equity markets had been trading almost exclusively on optimistic—perhaps too optimistic—outlooks stemming from coronavirus case trends, but…

In these challenging times, both bankers and bank customers are stressed and exhausted. Typical schedules are disrupted, work environments are upended, and business models are challenged.  Because this pandemic shock has brought us into new territory, there has never been a better time in modern banking history than now to enhance your value as a…

The focus of trading early in the week had been more on the outlook for reopening state economies and drug trial results for COVID-19 rather than current financial conditions. While that meant a risk-on market with equities recouping in April more than half of the 38% downdraft in February and March, fixed income has held…

It’s been exactly three months since the last regularly scheduled FOMC meeting and what a different world we are in versus the Fed meeting on January 29th. The Fed left the fed funds rate unchanged today (0.00%-0.25%) and did not tweak the Interest on Excess Reserves (still at 0.10%). There was some thought they would…

Not that the market is focused much on the current slate of economic results, we did get first quarter GDP this morning giving us a look at the beginnings of the economic calamity as the pandemic started to be felt in March. Recall that January and February economic results were generally positive, if not looking…

While we discussed our framework for deciding WHEN to call bank employees back to the branch lobbies and workplace, in this article, we cover HOW. The two decisions are interrelated since the sooner you look to reopen, the more risk you take, and the more resources you have to invest in a reopening plan. Since…