In a unanimous vote late last night, the Senate passed a sweeping $2 trillion stimulus package to provide relief to American consumers and businesses struggling as a result of the coronavirus pandemic. Once approved by the House and signed into law by President Trump, this legislation—which reflects days of bipartisan negotiations by Senate leadership and the White House—will help ensure banks have additional tools to help their customers and communities, and the nation’s economy, through the crisis.
Among other things, the law will provide significant enhancements to the Small Business Administration’s lending programs, including increasing to 100% the government guarantee of loans made for the 7(a) loan program’s new Paycheck Protection Program, and waiving certain requirements for SBA Economic Injury Disaster Loans made in response to the COVID-19 emergency.
In line with the bill being an economic growth measure, ABA actively advocated in conversations with policymakers over the past several days for measures that would allow banks to better serve their customers’ lending needs, including:
- TDR relief. Providing temporary relief from troubled debt restructurings beginning March 1, 2020, and extending for 60 days after the end of the COVID-19 national emergency, allowing banks to suspend the requirements under GAAP principles for loan modifications related to COVID-19 that would otherwise be categorized as TDRs.
- CECL delay. Giving institutions the option to delay the implementation of the current expected credit loss standard until the conclusion of the national emergency or Dec. 31, 2020, whichever comes first.
- Lower leverage ratio. Reducing the community bank leverage ratio from 9% to 8% until the end of the national emergency or Dec. 31, 2020, whichever comes first.
- Lending limit waiver. Temporarily waiving national bank lending limits until the end of the national emergency or Dec. 31, 2020, whichever comes first.
- Debt guarantee. Modifying the Dodd-Frank Act to give the FDIC authority to establish a temporary program to guarantee bank debt.
- Economic stabilization funding. Providing $500 billion to the Treasury Department to provide sufficiently collateralized loans, loan guarantees and other investments to eligible entities.
ABA President and CEO Rob Nichols applauded this unanimous action in response to the unprecedented health and economic crisis facing the nation. “America’s banks are already taking steps to assist customers and businesses affected by COVID-19, and this legislation will allow banks to provide even more critical assistance to borrowers in their communities,” Nichols said. “Banks of all sizes stand ready to do their part to support the economy and put the nation on a quick path to recovery.”
ABA staff are currently reviewing the text of the nearly 900-page bill and will issue a staff analysis for bankers in the coming days.
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