Tuesday Topic: Main Street "Dead on Arrival"

Our bank has closely followed this program, listening in on multiple "Ask the Fed" sessions and read the FAQs and ever changing term sheets.  We see some potential value for our larger customers and even prospects in a new market for such funding but the FED has made it more complicated than it needs to be for the situation and they seems to be determined that they will minimize losses to the FED.  As a result the companies needing the help likely will not get it and a bank could spend considerable time and not have the confidence that the loan will be accepted and with the high upfront fee feel compelled to not charge a fee as a result and we left with the 25bp service fee only.  But even with all of that, we were committed to making our bank one that could offer the loans and we filed the paperwork to be accepted only to be denied as a lender because of a non-response by me as the CFO of confirming the application.  I never heard from the FED even though I know the FED knows I exist and has my contact information which was also provided in the application.  So I'm not sure the FED really wants to make any loans under this program and is attempting to "play out the clock" to frustrate lenders from even considering it and if so, to make it hard to participate by denying the application to lend for no good reason.

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John Durbin
Senior VP & CFO
The Paducah Bank and Trust Company
Paducah KY
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Original Message:
Sent: 06-22-2020 09:47
From: Barb Rehm
Subject: Tuesday Topic: Main Street "Dead on Arrival"

The Fed's new Main Street Lending facility is "dead on arrival" one borrower told The Washington Post. He blamed banks that are either not participating, only making loans to existing customers, or don't even know about the new program, which offers loans of at least $250,000 to companies with up to 15,000 employees. "We have limited interest from community banks nationwide," ICBA's Paul Merski told the newspaper. "It's a very challenging and complex program." Two former Fed officials are recommending a slew of changes including lowering the minimum loan size, giving companies more than five years to repay, lowering the interest rates on loans for higher-quality, less-risky companies, and offering banks higher fees as an incentive to make more of these loans. What do you think about the new Main Street program? Will your bank participate? Why or why not? Let us know.

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Barb Rehm
Senior Managing Director
Promontory Interfinancial Network, LLC
Arlington VA
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