May 18, 2020

House passes HEROES Act; NAFCU pushes for CU relief

Capitol HillThe House Friday, on a 208-199 vote, passed a $3 trillion stimulus bill, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, with voting mainly along party lines. The bill, offered by House Democratic leadership, now heads to the Senate, where it is not expected to receive consideration by the Republican-led chamber. The Senate will likely propose its own relief package in the coming weeks.

“The House of Representatives' willingness to act to take the lead on the first step of the next phase of pandemic relief is commendable,” said NAFCU President and CEO Dan Berger. “While there are provisions in the HEROES Act that we applaud, such as changes to existing SBA lending programs and an additional $1 billion to the CDFI Fund, there are others that raise more concerns than they address. The legislation’s broad mandated blanket loan forbearance provisions and new limits on debt collection are among those we think require a closer look, as they could threaten to deepen our economic recession by posing safety and soundness risks to lenders if enacted.

“There are other proposals that already have bipartisan support but were not included in the HEROES Act, such as relief from the credit union member business lending cap and allowing credit unions greater flexibility in their lending. These would without a doubt help small businesses and consumers.  NAFCU will continue working with Congress and the administration throughout this process to ensure credit unions can better serve their members, small businesses and local communities amid the pandemic," Berger concluded.

As negotiations continue between Democrats and Republicans in the two chambers and the administration on additional relief measures, NAFCU will continue working with lawmakers to address credit unions' concerns and provide more relief to the industry. The association is specifically pushing for:

  • relief from the arbitrary member business lending cap (legislation to do so has been introduced in both chambers);
  • an extension to the outdated 15-year loan maturity limit;
  • additional capital relief;
  • additional funding for the NCUA's Community Development Revolving Loan Fund (CDRLF) and Treasury's Community Development Financial Institutions (CDFI) Fund;
  • making permanent the changes to the NCUA's Central Liquidity Facility to ensure credit unions have access to needed liquidity; and
  • allowing all credit unions to add underserved areas to their fields of membership.

House Democrats unveiled the proposal for the next phase of coronavirus relief last week. The HEROES Act focuses on providing assistance to workers, renters and homeowners, state and local governments, and more. 

While the bill does not contain certain provisions NAFCU has advocated against including, it does broaden mortgage forbearance to all single-family covered mortgages, not just those backed by the government, and includes the potential for a blanket restriction on first party debt collection during a national emergency, which could put unnecessary stress on credit unions. Read more about the forbearance provisions.

The HEROES Act makes several changes to the PPP, such as eliminating the requirement that at least 75 percent of the PPP loan forgivable amount must be used toward payroll; and clarifying the "hold harmless" provision for lenders, for which NAFCU has advocated.

Last week, Berger wrote to House leadership to share credit unions' perspective on the proposed HEROES Act. He emphasized that the HEROES Act should be "balanced to not harm credit unions' ability to serve their members," and raised concerns with some of the provisions which may have unintended consequences.

Subscribe to NAFCU Today for need to know updates as the association works to keep credit unions informed of developments.