Reading the book by F&S offers a curious parallel with William Harding’s reply, as Chairman of the Federal Reserve in 1919, to those who reproached the institution for failing to raise the discount rate when it was necessary (the issue had, in fact, been the subject of lively discussion within the Board): “The Board felt that it was its duty to cooperate with the Treasury authorities.
The guidance states that lenders should understand the long-term viability of the borrower’s business, focus on the strength of a borrower’s business plan, and analyze a borrower’s performance over a reasonable range of future conditions, rather than overly optimistic or pessimistic cases.