Major banking trades, including the Community Development Bankers Association (CDBA), American Bankers Association (ABA), Bank Policy Institute (BPI), Independent Community Bankers of America (ICBA), National Bankers Association (NBA), and National Association of Affordable Housing Lenders (NAAHL), are collectively urging Congress to appropriate $1 billion for the Community Development Financial Institutions (CDFI) Fund to aid in economic recovery in response to the coronavirus pandemic.
CDBA CEO Jeannine Jacokes wrote to the House Financial Services and Small Business Committees urging that the next recovery package addressing the current health and economic crisis provide meaningful support for low- and moderate-income communities.
CDBA CEO Jeannine Jacokes wrote to Secretary Steven Mnuchin of the U.S. Department of Treasury requesting additional consideration of the 1% interest rate introduced in the Interim Final Rule for the Small Business Administration's (SBA) Paycheck Protection Program (PPP), a new program authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CDBA members have expressed concern that PPP is insufficiently responsive to the need for bank liquidity, an essential consideration for CDBA members and all small- or mid-size banks rising to meet the rush of borrowers.
CDBA CEO Jeannine Jacokes wrote to Jodie Harris, Director of the Community Development Financial Institutions (CDFI) Fund, requesting that the CDFI Fund undertake considerable relief measures to support CDFIs as they face unprecedented challenges through the course of the COVID-19 health and economic crisis. The letter's requests include: extending deadlines without adverse consequence for CDFI banks submitting reporting and performance requirements, extending application deadlines, and allowing extended use periods and flexibility in how awarded funds are used.
CDBA joined other banking and credit union trade associations in a letter to Small Business Administration (SBA) Administrator Jovita Carranza emphasizing the need for timely and clear guidance regarding the temporarily expanded SBA 7(a) loan program aimed at providing small businesses with funds for critical items such as payroll, rent obligations, and utilities. Lenders that will participate in these programs will require clear and consistent guidance on how SBA intends them to operate in order to effectively serve their small business customers.
The Federal Reserve will temporarily stop all examination activity for banks with less than $100 billion of assets as it shifts supervisory priorities due to the coronavirus pandemic, the central bank said Tuesday.
The stakes are high for the financial services industry as lawmakers battle over the details of a new stimulus package to provide economic relief for businesses and consumers affected by the coronavirus outbreak. Although Senate Democrats blocked a vote on a package sponsored by Majority Leader Mitch McConnell, R-Ky., a whole host of provisions benefiting banks, credit union and other financial firms appears still to be on the table in McConnell's plan and other proposals being floated on Capitol Hill.
Banks and credit unions are eager to take advantage of newfound flexibility for restructuring loans battered by the coronavirus outbreak. Federal regulators and the Financial Accounting Standards board gave lenders a helping hand Sunday, agreeing that short-term loan modifications tied to the pandemic do not have to immediately count as troubled-debt restructurings. Normally, any concession made to a borrower would trigger classification as a TDR. In the aftermath of the financial crisis, restructured loans at banks topped $140 billion at the end of 2011.
CDBA and the major banking trades wrote congressional leaders to strongly urge that the provisions which would enhance and incentivize SBA's 7(a) loan program be included in the final CARES Act legislation. Private-sector banks and credit unions, whether they currently participate in SBA lending or not, will be turning to the SBA’s 7(a) loan program as the way to deliver capital and economic relief to the economy while conventional lending recedes in the wake of the current economic turmoil.
The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (collectively, the agencies) recognize the potential for Coronavirus Disease (also referred to as COVID-19) to adversely affect the customers and operations of financial institutions.