FEDERAL RESERVE BANKS: ACCEPT OF E-SIGNED COMMERCIAL LOANS AS COLLATERAL
Weakens (current state)
Lack of clarity in the FRBs’ policies toward electronic chattel paper means smaller lenders are less likely to adopt electronic processes for these kinds of transactions.
The 12 Federal Reserve banks lend to other banks by taking loans as collateral. Some FRBs will not accept electronically executed loans as collateral; others will only accept consumer loans, taking the position that commercial loans carry additional risk under UCC. In the past year, counsel for some of the FRBs have developed their own questionnaires to determine whether an electronic loan can be collateralized. Lack of clarity in the FRBs’ policies toward electronic chattel paper means smaller lenders are less likely to adopt electronic processes for these kinds of transactions.
Drive a single, clear policy across all 12 Federal Reserve Banks, accepting pledges of electronically signed credit agreements under conditions that are transparent and reasonable. Perhaps help draft a standard questionnaire or other assessment tool that could be used by all FRBs.
Potential to set up a campaign of affected parties to send clear message of the harm currently being caused.
