Help On The Way?
by CUAD Communications

North Dakota Senator Kevin Cramer and Minneapolis Fed President Neel Kashkari hosted a conference call on Thursday, March 19 for all North Dakota Financial Institutions. The purpose of the call was to share and discuss the impact of COVID-19 on the financial services industry and the important role financial institutions will play over the next several months. Also participating in the call was Alan Haut, ND SBA District Director and Christine Gaffney, Senior VP at the Minneapolis Fed.


Below is a recap of important points from the call.


On the heels of Coronavirus Recovery legislation already underway (including Phase 1, the supplemental appropriations bill, and Phase 2, targeted relief for individuals, including paid family leave) Thursday’s discussion was centered on Phase 3, broader economic stimulus designed to deliver cash to individuals to help them weather the downturn, as well as industry-specific relief.


The focus of Phase 3 appears to be threefold: (1) liquidity issues, (2) financial assistance for individuals and (3) assistance for distressed industries. According to Senator Cramer, legislation is being drafted in the $1 trillion range, which will hopefully be passed this week.


Senator Cramer emphasized that the purpose of this legislation is to ensure that workers can continue to be paid, keeping employers and employees connected and avoiding unemployment. The aid would be in the form of 100% federally guaranteed loans to employers who maintain payroll. Further, if employers maintain payroll, those loans would be forgiven. The pending legislation is expected to be retroactive to March 1.


Senator Cramer was open to input from financial institutions and fielded questions, which led him to comment that he would be making several recommendations to the language in the legislation to prevent any barriers to lenders assisting small businesses.


Alan Haut of the SBA went on to explain that the SBA loans would be made through SBA participating lenders, and the SBA will also seek to bring additional lenders into the program. Ultimately, the goal is to avoid defaults and foreclosures. Haut added that SBA staff in North Dakota is ready to educate financial institutions on how to get the funds to the small businesses once legislation is passed.


Find more information on SBA Disaster Assistance in Response to the Coronavirus including downloadable handouts here on our CUAD website. 


Christine Gaffney, Senior Vice President of Supervision, Regulation, and Credit from the Federal Reserve Bank of Minneapolis, also addressed the group with a status update for the 9th district. She stated that from the FED’s perspective, this is being treated as a natural disaster, however, the difference is that this is a U.S. economy-wide shock hitting the entire country at the same time. A recession will be determined on how the virus progresses. Financial institutions need to be functioning and efficient.


She stated that most banks in the 9th district are closing lobbies. The FED has had a large increase in cash demands, which is partly due to business continuity protocol, and partly because of consumer demand. From a regulatory standpoint, the FED heads of supervision are working with the Board of Governors to develop supervision principles so that safety and soundness can be maintained while being flexible in enforcement. Gaffney has also been working with ND DFI Commissioner Kruse so they don’t duplicate efforts. They are encouraging financial institutions to work with borrowers by extending maturities and taking interest-only payments.


In summary, Senator Cramer stated, “We are working on this legislation so financial institutions don’t have to be so worried about regulators. Everyone understands this is a natural disaster, and from top to bottom, there is a spirit of collaboration and support.”


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