Securitization of small business loans
Securitize the small business loans, pooled them across regions and sectors, and package them into tradable securities, sell them to hedge funds and other investors, take the lending risk out of the commercial banks. The Fed can buy them too, thus effectively lending directly to the small businesses. It will benefit everybody.
Securitize residential mortgages, pooled them across regions and sectors, and package them into tradable securities, sell them to hedge funds and other investors, taking the lending risk out of retail banks. The Fed can buy them too, thus effectively directly to home buyers. They can even lower interest rates to near zero and you won't even have to prove your income to get one of these mortgages, nor will you have to deal with those silly things called down payments. And if you have poor credit we can even structure your loan so that you can pay a really low payment now because by the time the rate changes you will have sold your house. It will benefit everybody.
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Yes, it's called the SBA.
Ther difference is that, small business loans stimulate the economic activities, while the residential mortgages do not. Securitized small business loans will be the next big thing on the trading floors. By buying and selling securitized small business loans, the Fed can have direct and immediate impact on the economy. Unlike the traditional monetary tools, it does not have to rely upon the commercial banks' willingness to lend. It would be a much more precise tool in the Fed's tool box than the traditional tools.
Yes. Everyone should own their own small businesses. Small-business ownership is the path to prosperity. Let's have everyone lever up, buy small businesses they can't afford, and everyone can get rich!
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