Garnet Capital is a financial services company specializing in managing loan portfolio sales and providing valuation services.
Of the many predictions and forecasts experts made on COVID-19’s effects and its subsequent lockdowns on the Financial Sector, very little light was shed on the excess liquidity that may result from it. A year later, banks are still grappling with excess deposits that have grown at an alarming rate.
The Fed Vice Chair for Supervision is exhorting the banks to lend more but realizes that there may be disincentives. One avenue banks and credit union can take is to buy high quality, shorter duration consumer assets with yields to bolster balance sheets.
With decreased spending opportunities due to the pandemic, consumers have lowered their expenses and continue to pay down debt. Unfortunately, this is making it difficult for banks and credit unions to support loan growth and earnings, which warrants the need to add loan growth through high-quality performing portfolios.
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