Credit unions to get new tools after Trump signs coronavirus relief bill
WASHINGTON — President Trump signed a $2 trillion coronavirus stimulus package Friday with a number of tools for banks and credit unions to increase their lending capacity to consumers hurt by the COVID-19 pandemic.
The House approved the economic relief plan earlier in the day by a voice vote, after the Senate had unanimously passed the measure on Wednesday. The deal amounts to the biggest aid package for businesses since the 2008 bank bailout. It authorizes the Treasury Department to direct $454 billion in loans and other types of assistance to Federal Reserve credit facilities meant to aid eligible businesses, states and municipalities.
"We want to demonstrate that we do care for the American people in every way," House Speaker Nancy Pelosi said of the passage of the Coronavirus Aid, Relief, and Economic Security, or CARES.
Rep. Patrick McHenry of North Carolina, the top Republican on the House Financial Services Committee, said in a press release that the bill “provides Treasury Secretary Mnuchin and [Federal Chairman Jerome Powell] with the resources they need to address the liquidity crisis facing Main Street businesses that employ millions of Americans.”
The bill would authorize the Federal Deposit Insurance Corp. to revive its crisis-era program backstopping bank-issued debt and noninterest-bearing transaction deposits that exceed the FDIC's $250,000 limit. Other regulatory relief measures in the bill would include an optional temporary delay to the start of the Current Expected Credit Losses standard, a temporary reprieve from capital requirements related to certain loan modifications, and a percentage point decrease in the community bank leverage ratio.
The legislation also expands the National Credit Union Administration's access to the Central Liquidity Facility, along with increased borrowing authority, which is intended to serve as a liquidity backstop for the industry. It also empowers the agency to increase coverage from the National Credit Union Share Insurance Fund for noninterest-bearing transaction accounts above the normal $250,000 threshold.
The bill also includes a provision to protect consumers’ credit reports if they need to make loan modifications related to the coronavirus. Financial institutions must report modified loan payments as “current” to credit reporting agencies, as long as the customer is fulfilling requirements pursuant to any modifications, for 120 days after the emergency declaration is lifted.
The stimulus package provides for up to 180 days of forbearance for borrowers of federally backed mortgage loans and it prohibits foreclosures on federally backed mortgage loans for 60 days.