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Hood, FI regulators discuss serving communities in need amid the coronavirus pandemic at hearing
NCUA Chairman Rodney Hood and representatives from other financial regulators testified before the Senate Banking Committee Tuesday sharing insights into the safety and soundness of the U.S. financial system and their efforts to provide financial institutions with relief and resources amid the coronavirus pandemic.
Ahead of the hearing, which also featured FDIC Chairman Jelena McWilliams, Federal Reserve Vice Chair for Supervision Randal Quarles and Comptroller of the Currency Joseph Otting, NAFCU sent a letter to the committee outlining ways the NCUA and lawmakers can provide even more relief to credit unions.
In his testimony, Hood noted “the credit union system is vital to the American economy” and touched on the NCUA’s actions to provide relief for credit unions during the pandemic.
Hood recently sent a letter to Senate Banking Committee Chairman Mike Crapo, R-Idaho, outlining greater relief options for credit unions amid the coronavirus pandemic. In the association’s letter sent ahead of the hearing, NAFCU Vice President of Legislative Affairs Brad Thaler reiterated NAFCU's support for several of Hood's recommendations, some of which were among issues lawmakers inquired about during the hearing. Crapo explicitly thanked Hood for his recommendations to support lending and encouraged the other regulators to do the same.
Further guidance
Sen. Doug Jones, D-Ala., questioned regulators on what guidance they have given to financial institutions to help them operate safely. Hood noted that the NCUA is encouraging credit unions to operate in a safe and sound environment and has not heard of any operational deficiencies.
In addition, Sen. Bob Menendez, D-N.J., asked whether regulators are providing guidance on how to set up a PPP pending process that honors fair lending requirements. Hood, in response, said the NCUA is encouraging CUs of all asset size to embrace PPP loans of all sizes, and has heard from both Minority Depository Institutions (MDIs) and Community Development Financial Institution (CDFI) credit unions have reported making loans to mains street lenders.
Examiner flexibility
Sen. Jerry Moran, R-Kan., questioned the regulators if they could ensure that they will not be overly aggressive during the exam process amid the pandemic. In response, Hood noted that “the NCUA has instructed all examiners to view loan modifications as positive actions and not to criticize institutions for doing the right thing by helping their member owners.”
Quarles and Otting also noted that they have issued guidance on this topic and will ensure examiners are complying.
In addition to these issues, a large portion of the discussion was focused on ensuring all Americans, including minority and underserved communities, have access to financial services.
Many of the questions centered on the Fed’s Main Street Lending Facility, which allows mid-sized firms that have existing lines with a lender to scale up the existing loan, rather than take out a new loan with a potentially different lender. The terms under the expanded facility are slightly different.
When questioned about when the facility will be up and running, Quarles noted they are moving quickly and must do the technical work to ensure they are rolled out accurately and efficiently. Quarles said they are aiming to move faster than in 2008, where the facilities were not deployed for months.
Another large portion of the discussion centered around the Community Reinvestment Act (CRA). Several senators criticized the FDIC and OCC for moving forward with their proposals to modernize the law as many have argued they weaken the law's intent. Credit unions currently are not subject to the federal law; NAFCU has actively opposed extending CRA regulations to credit unions.
The regulators will also participate in a virtual roundtable with the House Financial Services Committee (HFSC) Consumer Protection and Financial Institutions Subcommittee today. The roundtable is hosted by Subcommittee Chairman Gregory Meeks, D-N.Y. and Ranking Member Blaine Luetkemeyer, R-Mo.
Ahead of the roundtable, NAFCU sent a letter to the Consumer Protection and Financial Institutions Subcommittee to reiterate the association’s call for further relief for credit unions.
The association will continue working closely with the NCUA and Congress to address credit unions' concerns amid the coronavirus pandemic.