I have done a little more research into commercial paper (CP).
I'm not highly familiar with the CP market. However, I will say CP is a cash management tool. Assume a business has a large influx of cash (e.g. sales proceeds) arriving in a few days or weeks but needs cash immediately. It can sell CP to get the cash and redeem the CP when the influx arrives. Another use mentioned in the Wikipedia article is to purchase inventory. A business could use CP proceeds to buy inventory and then redeem the CP when the inventory is sold. Also, due to its short-term nature and consequently its rapid turnover, a general tightening of credit will most likely first appear most prominently in the CP market.
I still have not found a lot about the nature of the assets (collateral) behind asset backed commercial paper (ABCP). However, I have found that one of the larger issuers is Toyota Motor Credit Corporation. "The company provides retail leasing, retail and wholesale financing, and other financial services to Toyota, Lexus, and Scion dealers and their customers for the purchase of new and used cars and trucks." (link)
The biggest user of all is General Electric Capital Corporation.: "GE provides loans, operating leases, financing programs, commercial insurance, equipment leasing of every kind, and other services in over 35 countries around the world." (link) "GE Money provides credit services to more than 130 million customers — like retailers, consumers, auto dealers and mortgage lenders. Our financial products and services include a suite of offerings, from credit cards to debt consolidation to home equity loans, solutions that enable our customers to pursue their dreams." (link)
What about the banks? I don't have and couldn't quickly find much about their use of CP. However, from here: "Commercial paper is a short-term unsecured promissory note maturing in less than 270 days issued by banks for a fee on behalf of corporations and other borrowers to raise funds from investors with idle cash. It is a low-cost alternative to bank loans. US issuers are able to efficiently raise large amounts of funds."
Note the phrase "on behalf of." I think you'd agree that these three concern "Main Street." Also, I take that use as a hint about unsecured CP. I assume a bank could collateralize with its own assets, but could not with a customer's assets the bank has no control over. I have also read that the greater concern about CP is about unsecured CP.
Banks may have been and still are using CP to facilitate securitizing (selling off) mortgage pools, but no doubt the volume has declined.
Like the Wikipedia article suggests, CP is a substitute for bank loans. Given this and all the above further reinforces my earlier point that the Forbes article really downplays CP.
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