Yale School of Management

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Debt Mounts for US Retail and Lodging Mortgagors

June 18, 2020
Government-mandated shutdowns in response to the novel coronavirus have triggered delinquencies among commercial mortgages as businesses struggle with revenue. The purpose of this article is to characterize the risks to US commercial real estate posed by COVID-19 responses. Due to reporting incentives, data on mortgages packaged into commercial mortgage-backed securities (CMBS) is more accessible and granular than data on the whole commercial mortgage market. Even though CMBS-associated properties constitute just 20% of outstanding multifamily and commercial debt, the data generated by such properties can indicate how the whole commercial real estate sector may be affected. On June 4, commercial real estate research firm Trepp reported its largest jump in delinquencies among mortgages involved in the $1.4 trillion CMBS market, with the rate spiking from 2.29% to 7.15%. Continue reading “Debt Mounts for US Retail and Lodging Mortgagors”

Small Business Administration Announces Updates to Small Business Support Programs

June 18, 2020
The Small Business Administration (SBA) and Treasury recently released guidance related to the Paycheck Protection Program (PPP) to clarify that they will forgive loans to employers that are unable to rehire or maintain employment levels. The agencies also released a simplified forgiveness application. Continue reading “Small Business Administration Announces Updates to Small Business Support Programs”

News in Systemic Risk: Thursday, June 18, 2020 (10 a.m. ET)

June 18, 2020
Designing the Main Street Lending Program: Challenges and Options (William B. English, J. Nellie Liang; Brookings Institution) The bank business model in the post-Covid-19 world (Elena Carletti, Stijn Claessens, Antonio Fatás, Xavier Vives; VoxEU) Identifying indicators of systemic risk (Benny Hartwig, Christoph Meinerding, Yves Schüler; Deutsche Bundesbank) The COVID-19 Pandemic and the Opacity of Firms' and Banks' Balance Sheets (Luisa Carpinelli, Raffaele Gallo, Francesco Palazzo; Bank of Italy) Central Counterparty Default Waterfalls and Systemic Loss (Mark Paddrick, Simpson Zhang; Office of Financial Research) FHFA Extends Foreclosure and Eviction Moratorium (Federal Housing Finance Agency) Continue reading “News in Systemic Risk: Thursday, June 18, 2020 (10 a.m. ET)”

News in Systemic Risk: Wednesday, June 17, 2020 (10 a.m. ET)

June 17, 2020
A financial system to support the recovery (Charles Randell; UK Financial Conduct Authority) Access to finance for small and medium-sized enterprises since the financial crisis: evidence from survey data (Katarzyna Bańkowska, Annalisa Ferrando, Juan Angel Garcia; European Central Bank) Short-time work schemes and their effects on wages and disposable income (António Dias da Silva, Maarten Dossche, Ferdinand Dreher, Claudia Foroni, Gerrit Koester; European Central Bank) The fiscal response to the Covid-19 crisis in advanced and emerging market economies (Enrique Alberola-Ila, Yavuz Arslan, Gong Cheng, Richhild Moessner; Bank of International Settlements) Central bank independence and systemic risk (Alin Marius Andrieș, Anca Maria Podpiera, Nicu Sprincean; Bank of Finland) The Looming Bank Collapse (Frank Partnoy; The Atlantic) Continue reading “News in Systemic Risk: Wednesday, June 17, 2020 (10 a.m. ET)”

COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation

June 17, 2020
Insurance supervisors around the world outside the U.S. have urged companies they supervise to conserve capital during the COVID-19 crisis by limiting payouts to shareholders and bonuses to executives.  At the same time, many supervisors have sought to help insurers avoid procyclical behavior by mitigating the impact of volatile market swings on the value of insurance company assets and, in turn, on measures of their capital adequacy.  Continue reading “COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation”

COVID-19 and Insurance (2 of 3): Operational Regulatory Relief

June 16, 2020
Many insurance supervisors have provided temporary relief to help companies manage during the COVID-19 crisis. Most of this relief comes in the form of extended deadlines for submitting various reports or provisions that make remote compliance easier. Regulators have also suspended supervisory activities and loosened accounting rules. Continue reading “COVID-19 and Insurance (2 of 3): Operational Regulatory Relief”

Debt Mounts for US Retail and Lodging Mortgagors

June 18, 2020
Government-mandated shutdowns in response to the novel coronavirus have triggered delinquencies among commercial mortgages as businesses struggle with revenue. The purpose of this article is to characterize the risks to US commercial real estate posed by COVID-19 responses. Due to reporting incentives, data on mortgages packaged into commercial mortgage-backed securities (CMBS) is more accessible and granular than data on the whole commercial mortgage market. Even though CMBS-associated properties constitute just 20% of outstanding multifamily and commercial debt, the data generated by such properties can indicate how the whole commercial real estate sector may be affected. On June 4, commercial real estate research firm Trepp reported its largest jump in delinquencies among mortgages involved in the $1.4 trillion CMBS market, with the rate spiking from 2.29% to 7.15%. Continue reading “Debt Mounts for US Retail and Lodging Mortgagors”

Small Business Administration Announces Updates to Small Business Support Programs

June 18, 2020
The Small Business Administration (SBA) and Treasury recently released guidance related to the Paycheck Protection Program (PPP) to clarify that they will forgive loans to employers that are unable to rehire or maintain employment levels. The agencies also released a simplified forgiveness application. Continue reading “Small Business Administration Announces Updates to Small Business Support Programs”

News in Systemic Risk: Thursday, June 18, 2020 (10 a.m. ET)

June 18, 2020
Designing the Main Street Lending Program: Challenges and Options (William B. English, J. Nellie Liang; Brookings Institution) The bank business model in the post-Covid-19 world (Elena Carletti, Stijn Claessens, Antonio Fatás, Xavier Vives; VoxEU) Identifying indicators of systemic risk (Benny Hartwig, Christoph Meinerding, Yves Schüler; Deutsche Bundesbank) The COVID-19 Pandemic and the Opacity of Firms' and Banks' Balance Sheets (Luisa Carpinelli, Raffaele Gallo, Francesco Palazzo; Bank of Italy) Central Counterparty Default Waterfalls and Systemic Loss (Mark Paddrick, Simpson Zhang; Office of Financial Research) FHFA Extends Foreclosure and Eviction Moratorium (Federal Housing Finance Agency) Continue reading “News in Systemic Risk: Thursday, June 18, 2020 (10 a.m. ET)”

News in Systemic Risk: Wednesday, June 17, 2020 (10 a.m. ET)

June 17, 2020
A financial system to support the recovery (Charles Randell; UK Financial Conduct Authority) Access to finance for small and medium-sized enterprises since the financial crisis: evidence from survey data (Katarzyna Bańkowska, Annalisa Ferrando, Juan Angel Garcia; European Central Bank) Short-time work schemes and their effects on wages and disposable income (António Dias da Silva, Maarten Dossche, Ferdinand Dreher, Claudia Foroni, Gerrit Koester; European Central Bank) The fiscal response to the Covid-19 crisis in advanced and emerging market economies (Enrique Alberola-Ila, Yavuz Arslan, Gong Cheng, Richhild Moessner; Bank of International Settlements) Central bank independence and systemic risk (Alin Marius Andrieș, Anca Maria Podpiera, Nicu Sprincean; Bank of Finland) The Looming Bank Collapse (Frank Partnoy; The Atlantic) Continue reading “News in Systemic Risk: Wednesday, June 17, 2020 (10 a.m. ET)”

COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation

June 17, 2020
Insurance supervisors around the world outside the U.S. have urged companies they supervise to conserve capital during the COVID-19 crisis by limiting payouts to shareholders and bonuses to executives.  At the same time, many supervisors have sought to help insurers avoid procyclical behavior by mitigating the impact of volatile market swings on the value of insurance company assets and, in turn, on measures of their capital adequacy.  Continue reading “COVID-19 and Insurance (3 of 3): Capital Conservation and Countercyclical Regulation”

COVID-19 and Insurance (2 of 3): Operational Regulatory Relief

June 16, 2020
Many insurance supervisors have provided temporary relief to help companies manage during the COVID-19 crisis. Most of this relief comes in the form of extended deadlines for submitting various reports or provisions that make remote compliance easier. Regulators have also suspended supervisory activities and loosened accounting rules. Continue reading “COVID-19 and Insurance (2 of 3): Operational Regulatory Relief”