May 15, 2020

NAFCU's Berger details CU perspective on HEROES Act

capitalAhead of an expected House vote on the measure today, NAFCU President and CEO Dan Berger Thursday wrote to House leadership to share credit unions' perspective on the proposed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. House Democrats unveiled the $3 trillion proposal for the next phase of coronavirus relief earlier this week.

As proposed, the bill focuses on providing assistance to workers, renters and homeowners, state and local governments, and more. 

While the HEROES Act 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.

In the letter, Berger noted credit unions' efforts to assist their members, including the important rule credit unions play in helping small business through the Small Business Administration's (SBA) paycheck protection program.

"NAFCU survey results have found that credit unions participating in the PPP have made, on average, over 200 loans in the first two phases, though we have heard from some credit unions that have made over 1,000 loans," highlighted Berger. "While there is variation, the average loan size made by credit unions is well under $75,000. "

"Even more strikingly, NAFCU’s survey also found that over 75 percent of credit unions’ approved PPP loans went to self-employed/gig workers or businesses with under 10 employees," he added.

The HEROES Act makes several changes to the PPP, such as e 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.

Berger shared NAFCU's support for HEROES Act measures that would help credit unions serve their members, including:

  • changes to SBA loan programs other than the PPP, including increasing the guaranteed portion of existing SBA loans to 90 percent until September 30, 2021; and
  • an additional $1 billion in emergency funding for the Community Development Financial Institutions (CDFI) Fund.

Berger also highlighted additional measures NAFCU believes must be included in any future relief efforts and has previously advocated for, including:

  • legislation to exclude business loans made in response to the coronavirus pandemic and relief efforts from the credit union  member business lending (MBL) cap;
  • legislation to provide credit unions with relief from the 15-year general maturity limit found in the Federal Credit Union Act;
  • capital and prompt correction action flexibility;
  • additional CDRLF funding;
  • liquidity for credit unions; and
  • legislation that would allow credit unions to do more to help underserved populations.

Additionally, Berger 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.

NAFCU will continue working with lawmakers to address credit unions' concerns and provide more relief to the industry and will keep credit unions informed of the latest developments.