Economic impact, response to COVID-19 focus of Mnuchin, Powell hearing
While appearing before the Senate Banking Committee Tuesday to give an update on the implementation of the CARES Act, Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell discussed the economic toll of the coronavirus and how the government entities are working to limit the negative effects and support recovery.
NAFCU's advocacy secured several positive provisions for credit unions in the CARES Act. The association has been in constant contact with the Senate Banking Committee over the past week as the association seeks additional relief for the industry, including for capital flexibility for credit unions to be on par with what community banks received in the law: One of the association's letters was submitted into the record for the committee's hearing last week with financial regulators, and a follow-up was sent reiterating its recommendations.
Of note during the hearing, Mnuchin was questioned on the implementation of the Small Business Administration's (SBA) paycheck protection program (PPP), which was created by the CARES Act. More than $500 billion in loans has been provided by almost 5,500 lenders through the program since its April 3 launch. Mnuchin touted that nearly 400 Community Development Financial Institutions (CDFIs) and minority depository institutions (MDIs) are participating as PPP lenders.
Several lawmakers noted concerns about PPP loans not reaching underserved or low-income communities, as well as the need for more guidance related to loan forgiveness and reporting requirements for lenders.
NAFCU is working closely with the SBA, Treasury, and Congress to ensure credit unions can lend effectively through the PPP; several credit unions experienced issues accessing the PPP website after it launched, delaying their ability to provide loans to businesses in need. The association continues to call for more guidance and additional set asides for credit unions and other small lenders in future funding packages to ensure the smallest businesses have access to program loans.
Mnuchin and Powell also discussed the Fed's efforts to support the economy through its new or expanded lending facilities that are providing up to $2.3 trillion in loans to households and businesses of all sizes. The Treasury Department is providing funds provided by the CARES Act to support some of these facilities. Many senators questioned when these programs will start providing loans to businesses and municipalities.
In addition, concerns related to homeowners' and renters' ability to make payments were raised during the hearing. Since the CARES Act was enacted at the end of March and provided forbearance options for homeowners, NAFCU has shared with the FHFA concerns about the health of mortgage markets and the need to provide credit unions and other mortgage servicers with additional relief. The CARES Act did not provide relief for mortgage servicers, such as credit unions, but the FHFA heeded NAFCU's call and has made an effort to do so. The FHFA Tuesday also announced an extension of the government-sponsored enterprises' ability to purchase loans in forbearance, among other guidance.
NAFCU has a summary chart on the CARES Act available online and continues to work with agencies as they implement its provisions. The association will maintain its award-winning advocacy efforts to secure even more relief for credit unions in future relief packages. While the House recently passed its proposed Phase 4 package, which included some changes to the PPP and expanded forbearance provisions, the Senate is not expected to take it up and could instead release its own proposal in the coming weeks.
Get daily updates.
Subscribe to NAFCU today.