SDBA eNews

March 26, 2020

ABA-Advocated Provisions Included in New Coronavirus Bill

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. Read the bill.

SDBA To Hold Member COVID-19 Update Conference Call on Friday

The SDBA will hold a member COVID-19 update conference call on Friday, March 27, at 11 a.m. CDT (10 a.m. MDT). 

During the call, Bret Afdahl, director of the South Dakota Division of Banking, will discuss COVID-19 public health concerns, best practices and regulatory guidance. SDBA President Curt Everson will discuss state and local government issues and federal economic stimulus legislation. There will also be time for Q&A from bankers. 

To participate, call 605.799.1107, and the participant code is 387508. The SDBA continues to provide updated information on its coronavirus pageQuestions, contact the SDBA Office at 605.224.1653.

ABA Urges SBA to Provide Guidance to Banks on Coronavirus Relief

As the Senate moved closer to passage of a coronavirus relief package yesterday, ABA joined a coalition of financial services trades in a letter to U.S. Small Business Administrator Jovita Carranza seeking “clear and consistent guidance” on how SBA intends to enact changes to its 7(a) loan program. The groups urged SBA to provide “bright-line rules, free from ambiguity.”

The new law authorized $350 billion in funds for a temporary expansion of the program to ensure that small businesses facing extreme financial hardship during the coronavirus pandemic can meet critical costs including payroll, rent and utilities. It also allows virtually any lender to apply to become a 7(a) lender and increases the funding level for existing 7(a) loans. Read the letter.

Fed Expands Stimulus Measures, Quantitative Easing; Will Support Corporate Credit

In its most sweeping move yet to prop up the U.S. economy amid the coronavirus pandemic and public health response, the Federal Reserve on Monday unveiled several new facilities to support the flow of up to $300 billion in financing to households and businesses and committed to quantitative easing “in amounts needed” to support market functioning.



“The coronavirus pandemic is causing tremendous hardship across the United States and around the world,” the Fed said. “While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”
New efforts announced include:
  • Two new facilities to support credit to large employers, including a Primary Market Corporate Credit Facility to bond and loan issuance to investment-grade companies with four-year bridge financing, facilitating continued payments to employees and vendors.
  • Also supporting large employers, a Secondary Market Corporate Credit Facility to provide liquidity for outstanding investment-grade corporate bonds.
  • A Term Asset-Backed Securities Loan Facility, or TALF, to suppose issuance of securities backed by student loans, auto loans, credit card debt and Small Business Administration-guaranteed loans.
  • Federal Open Market Committee purchases of commercial mortgage-backed securities along with agency MBS as part of its previously announced round of quantitative easing, which will expand as needed to support smooth market functioning.
  • Expansions to previously announced facilities, allowing the Money Market Mutual Fund Liquidity Facility to accept municipal variable rate demand notes and bank CDs as collateral, allowing the Commercial Paper Funding Facility to accept high-quality, tax-exempt commercial paper as eligible securities and lowering prices on the CPFF.
The PMCCF, SMCCF, TALF and CPFF will be supported by equity infusions from the Treasury Department’s Exchange Stabilization Fund. Companies expected to receive aid under pending legislation are not eligible for PMCCF and SMCCF participation. The Fed said it would soon announce a “Main Street Business Lending Program,” complementing SBA efforts, to support loans to small and midsize businesses.
These efforts come atop other Fed actions in recent days, including liquidity facilities for commercial paper, money market funds and primary dealers; expansion of central bank liquidity swap lines; efforts to promote use of the discount window; elimination of reserve requirements; and guidance encouraging banks to be flexible with customers affected by COVID-19. Read more.

GSEs Announce Payment Deferral Option for Borrowers Exiting Forbearance

In communications to lenders yesterday, Fannie Mae and Freddie Mac announced a new home retention workout option that would allow eligible borrowers who have resolved a temporary hardship and resumed their monthly mortgage payments to make payment deferrals if they cannot afford a full reinstatement or repayment plan to bring the loan current.

The updates outlines several criteria for borrowers seeking payment deferrals, including that the mortgage loan must: be a conventional first lien mortgage loan; be 30 to 60 days delinquent for at least three consecutive months; have been originated at least 12 months prior to the evaluation date for a payment deferral; and have not received a prior payment deferral.

They also address how to determine payment deferral terms, the processing of payment deferral for various loan types, fees and more. Servicers may begin evaluating borrowers for payment deferrals on or after July 1, 2020.

Banking Agencies to Host Webinar on COVID-19 Response

The Federal and state financial institution regulatory agencies will host an interagency webinar Friday, March 27, at 1 p.m. CDT intended to clarify a recently issued statement encouraging financial institutions to work constructively with borrowers affected by the coronavirus pandemic. The webinar will provide additional information about loan modifications, including when such modifications would not result in accounting for troubled debt restructuring designation. Questions may be submitted in advance by emailing [email protected]Register nowRead the interagency statement.

ABA Webinar to Address SBA Programs to Help Amid Pandemic

ABA will host a free webinar for bankers today, March 26, at noon CDT to help banks learn how to employ Small Business Administration programs to help their commercial customers affected by the coronavirus pandemic.

Experts from the SBA Office of Disaster Assistance and SBA Office of Capital Access will discuss:

  • Emergency Injury Disaster Loans, and their use nationwide in the response to the COVID-19 pandemic.
  • SBA loan products and access to capital to help small business clients.
  • Provide an update on plans to expand SBA programs in response to COVID19

ABA VP Dan Martini will lead a Q&A. This is the first of a two-part series; a second webinar will follow after Congress enacts its latest coronavirus response package. Register for the webinar.

ABA Offers Tips for Consumers to Avoid Coronavirus Fraud Scams

As the coronavirus pandemic continues, scammers are exploiting consumers’ fears and uncertainties about the virus to perpetrate a range of fraud scams. ABA has published a list of common scams associated with the coronavirus, as well as 10 tips for consumers to follow to protect themselves and their finances. Bankers are welcome to use these tips freely to educate their customers. Read more.

Compliance Alliance


Question of the Week

Free Webinar: To help provide more information about the COVID-19 pandemic as it relates to banking, Compliance Alliance will be hosting a webinar for all bankers regardless of membership on Tuesday, March 31, at 2:30 p.m. CDT. Register for the webinar.

Question: Our bank qualifies for the HMDA partial exemption. Some of the data points that we are exempt are things we don’t use, like credit scores or automatic underwriting systems. So in reporting these data points, should  I report “Exempt” or “Not applicable” in those fields?

Answer: If the bank meets the partial exemption, the bank would report “Exempt/1111” for those fields if the bank is choosing to not report them. See generally:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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Contact Alisa Bousa, SDBA, at 800.726.7322 or via email.