COVID-19

Citi plans to buy PPP loans from minority-owned lenders

Justin Ho May 21, 2020
Heard on: Marketplace Morning Report
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Citi says it will purchase $50 million in loans from minority-owned lenders. Bruce Bennett/Getty Images
COVID-19

Citi plans to buy PPP loans from minority-owned lenders

Justin Ho May 21, 2020
Citi says it will purchase $50 million in loans from minority-owned lenders. Bruce Bennett/Getty Images
HTML EMBED:
COPY

This week, banking giant Citi announced it will purchase Paycheck Protection Program loans from a number of smaller institutions. Citi says it will purchase $50 million in loans from minority-owned lenders.

Minority-owned banks tend to serve people in communities where jobs have been hit hard by the pandemic, says banking consultant Mayra Rodriguez Valladares at MRV Associates.

“And so they’re withdrawing deposits from the banks. And so what that means is that the banks don’t have enough money to lend,” she said.

By purchasing a loan from a bank’s balance sheet, Citi is giving the minority-owned lender capital in return. Valladares says that can help those lenders issue more loans than they otherwise could with their own deposits.

“And really, right now, it’s critical to be making loans to as many people as possible,” she said.

The PPP loans Citi’s taking on are low risk since the loans are guaranteed by the Small Business Administration.

Kent Belasco, director of the commercial banking program at Marquette University, says there’s another benefit for Citi. Banks want to be viewed as a go-to place for pandemic relief.

“That bodes well from a reputation standpoint,” Belasco said.

Citi says it doesn’t anticipate making any profits from the loans it takes on.

COVID-19 Economy FAQs

New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?

Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday  — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

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