Quote:
Originally Posted by Tyrone Slothrop
The bold part would be interesting if true.
1. Collect underpants
2. ?
3. Banks will be forced to workout loans with small to mid-sized businesses.
Banks have been less and less interested in serving smaller customers for years.
|
You don't know much about workouts.
Banks hate taking assets. If there is no buyer for real estate or equipment against which the bank is collateralized (and indeed PE would be one of the sole sources of capital able to do so) the bank has two choices:
1. Auction collateral at huge loss; or,
2. Workout the loan
You're correct that BofA or WF aren't initially going to workout much for smaller businesses. But regionals and community banks will do so. And over time, as huge # of businesses become distressed, big banks will do so as well. Having a loan in workout on the books is preferable to realizing loss (particularly where bank would be realizing huge # of losses at once).
