Weekly Global News Wrap: US Fed to grant funds vs payroll loans; Germany ‘worried' if banks can survive economic crisis

And Wells Fargo caps coronavirus relief at $10b.

From Reuters:

The US Federal Reserve is supporting a new small-business lending program by allowing banks to turn these loans over to the US central bank for cash, easing concerns among banks about getting stuck holding the low interest loans.

The Fed said it would announce additional details later this week of a new term financing arrangement for loans made under what is known as the Payroll Protection Program.

The Payroll Protection Program is one of the key measures adopted as part of a more than $2t effort to offset the economic impact of the coronavirus, which has forced large portions of the US economy to shutter.

From Reuters:

As Germany rolls out a $815b (EUR750b) economic stimulus package, officials and experts are discussing whether its banks will be able to survive the economic fallout without state support.

The government believes the aid package has bought the country three months of breathing space, sources said. Nevertheless, a debate has begun over what could be done to reinforce the banks should the need arise.

Officials have discussed various options in recent weeks to reinforce the sector, including a state agency taking stakes in banks to inject capital. State guarantees could be given to vouch for the creditworthiness of listed banks as well as state-backed commercial lenders to bolster their standing.

From CNBC:

Wells Fargo is limiting its participation in the US government’s small business coronavirus rescue program at $10b due to regulatory restrictions.

The $350b relief will provide low-interest loans to help small businesses cover payroll and other fixed costs over the next eight weeks.

In 2018, the Fed ordered the bank to keep its assets below $1.95t until it had improved its governance and risk controls following a wave of sales practice scandals. The bank started 2020 with roughly $20b of room under the cap, according to filings.

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