Legislative Update with Jay Kruse
by Jay Kruse
Chief Advocacy Officer
5/6/2020

Good Morning!

 

The Senate is back in session this week and the House is expected back in Washington next week. Phase 4 stimulus and recovery legislation is developing. We continue to communicate with our Dakotas’ Congressional delegation to find ways to help credit unions and their members navigate through these unprecedented times. CUNA CEO, Jim Nussle, also met with members of the House Financial Services Committee, as part of a bi-partisan briefing to give an update on the credit union industry’s response to the pandemic.

 

Congress is increasingly interested to hear results and feedback regarding the rollout of the second wave of funding for the Paycheck Protection Program, as future funding continues to be discussed. Jeff Olson detailed the PPP stats for North and South Dakota through May 1 in this week’s President’s Perspective. The full report can be found here on the SBA’s website.

 

PPP FAQ Update.

 

Treasury and the SBA updated its FAQ for the Paycheck Protection Program, which can be found here.  To note, this FAQ update confirms the SBA will review certain individual PPP loan files in addition to clarifying that a small businesses loan forgiveness amount will not be affected should the employer attempt to rehire an employee, but the employee declines the offer, so long as there is documentation. 

 

Phase 4 stimulus and recovery legislation is developing.

 

There are many discussions taking place across Capitol Hill, and it is still uncertain which provisions will be included in the final version of legislation following party negotiations. A few items of interest to credit unions that are being considered include:

  • Exemption from the business lending cap for loans made during the pandemic for the next three years. The NCUA made a similar request to Congress.
  • Extended amortizations for agricultural loan losses that meet certain requirements, such as ag loan concentration of not less than 10 percent, and net worth ratio of at least 9 percent.
  • National standard for Remote Online Notarization.

NCUA Chairman Hood Calls for CECL Exemption. 

 

I briefly mentioned the NCUA request to Congress regarding the business lending cap. That request was included in a letter from the NCUA Chairman to Senator Crapo (R-ID), Chairman of the Senate Banking Committee, with suggestions Congress can make to improve the operating environment for credit unions. Many suggestions in the letter, which can be found here, align with CUNA/League efforts raised during engagement in recent weeks with both the NCUA and members of Congress.

 

In an additional letter, Chairman Hood also urged the Financial Accounting Standards Board to exempt credit unions from complying with the current expected credit losses methodology, or CECL.

 

“I believe the compliance costs associated with implementing CECL overwhelmingly exceed the benefits,” Chairman Hood wrote. “Even before the current pandemic, credit unions had approached the NCUA with concerns about the unintended consequences of requiring credit unions to implement CECL. In our current environment, I am especially concerned that adopting CECL will have a chilling effect on lending, including loans to low-income borrowers.” The entire letter from the NCUA to FASB can be found here.

 

Stay well, have a great week, and don’t hesitate to contact me with any questions.

 

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