SDBA eNews

July 30, 2020

Urge House Members to Support PPP Forgiveness Legislation

With H.R. 7777, a bill to simplify the forgiveness process for Paycheck Protection Program loans, recently introduced in the House, ABA continues urging bankers to use the Secure American Opportunity grassroots platform to ask their members of Congress to support the bill.

This legislation—which has a companion bill in the Senate—would allow PPP loans of $150,000 or less to be forgiven once the borrower completes a one-page forgiveness attestation. ABA asks bankers to add their voices to the chorus and contact their representatives. The bill is expected to ease the forgiveness process for approximately 86% of PPP borrowers, in addition to saving an estimated $7 billion and hours of paperwork. Contact your representative now.

Lenders May Submit PPP Forgiveness Decisions Beginning Aug. 10

The Small Business Administration last Thursday issued a procedural notice providing detailed instructions for Paycheck Protection Program lenders on the PPP forgiveness process. The notice outlines processes for submitting decisions on PPP borrower loan forgiveness applications to SBA, requesting payment of the forgiveness amount determined by the lender, SBA loan forgiveness reviews and payment of the loan forgiveness amount determined by SBA.

Lenders may begin submitting their loan forgiveness decisions to SBA’s secure PPP Forgiveness Platform on Aug. 10, 2020, subject to extension if any new legislative amendments to the forgiveness process necessitate changes to the system. All PPP lender authorizing officials currently registered in the E-Tran system will receive a welcome email from SBA with instructions on accessing the platform. Authorizing officials who do not receive a welcome email should contact SBA’s PPP lender hotline at 833-572-0502 for more information.

SBA also said it will soon issue an interim final rule addressing how borrowers can appeal SBA’s determination on PPP loan or loan forgiveness eligibility. Read the notice

Coin Task Force Issues Statement on Circulation Slowdown

With the COVID-19 pandemic continuing to disrupt the normal circulation of coinage in the U.S. economy, the U.S. Coin Task Force convened by the Federal Reserve issued a statement last Friday describing the circulation slowdown and urging consumers to get coins back into use.

The task force—which includes ABA, alongside representatives from the Fed, the U.S. Mint, the armored car industry, food distribution and other sectors—urged consumers to start spending the coins they have at home (while observing coronavirus-related precautions), deposit coins at their financial institutions and redeem coins at retail coin kiosks. The task force also urged people to use the hashtag #getcoinmoving in social media posts to help the public understand that the circulation slowdown is not a coin shortage.

“Many have referred to this as a shortage; however, it is not,” the statement said. “There is approximately $48 billion in coin already in circulation, most of which is sitting dormant inside America’s 128 million households. As people have changed their spending habits, and coin-intensive businesses and financial institution lobbies have been less accessible, the nation’s coin is pooling in change jars, in car cup holders and in shuttered businesses, making it difficult for the businesses of this country to get the coin that they need to support cash transactions.”

Last week, the U.S. Mint said it has been operating at full production capacity since mid-June, producing almost 1.6 billion coins in June alone and expects to continue producing at around that capacity for the remainder of the year. ABA continues to be engaged on addressing the issue through its participation in the task force. Read the statement. For more information, contact ABA's Steve Kenneally.

Financial Trades Raise Concerns About Potential OCC Payments Charter

ABA joined several financial trade associations yesterday in a letter to Acting Comptroller of the Currency Brian Brooks expressing concerns about the OCC’s plans to move forward with a narrow-purpose payments charter, noting that they would strongly oppose efforts to do so.

The letter came after Brooks announced on an episode of the ABA Banking Journal Podcast last month that the OCC will unveil a charter this fall that would essentially be a “national version of a state money transmission license,” offering nonbank payment providers “a national platform with preemption.” He also indicated that the OCC would seek to allow firms operating successfully under this charter to be granted direct Fed access after a certain time period.

“These charters could introduce serious risks that would undermine the valuable role that national banks play in our dynamic economy,” the groups noted. “We believe that a payments-focused charter introduces serious unintended consequences.”

The associations urged OCC to proceed carefully and they emphasized that existing rules and oversight should be applied consistently with those adhered to by national banks. “The issues being considered have broad implications for the banking system and longstanding policy determinations. Any change in them should be subject to robust public comment well before considering a new charter.”

IRS Finalizes Guidance Addressing Business Interest Expense Deduction Limitations

The Internal Revenue Service on Tuesday released a long-awaited package of final regulations addressing restrictions on deducting net interest expense, pursuant to the 2017 tax reform law. The regulations generally apply to taxpayers with defined levels of gross receipts and restrict the deductibility of net interest expense to an amount that does not exceed a certain percentage of a taxpayer’s adjusted taxable income. Since the restriction applies to net business interest expense, and banks have net business interest income, the regulations should not apply to banks as taxpayers—but they will affect certain bank customers.

The IRS also released proposed regulations that provide additional guidance on various business interest expense deduction limitation issues that were not addressed in the final regulations. It also issued a notice providing a safe harbor and a set of FAQs on aggregation rules that apply for purposes of the gross receipts test and that apply to determine whether a taxpayer is a small business that is exempt from the business interest expense deduction limitation.

ABA is currently in the process of reviewing this nearly 900-page regulatory package and will provide additional information to members as needed.

Podcast: Coaching Business Clients Through the COVID Crisis

Beyond the immediate changes required by social distancing, the COVID-19 pandemic has “accelerated things that were in progress for a long time,” says Frank Sorrentino, chairman and CEO of ConnectOne Bank. The economic and social changes being wrought by the coronavirus make it “incumbent on us as bankers to have those conversations . . . to bring that advice to your clients.”

For example, Sorrentino had a restaurant owner who came in panicked about the future. When ConnectOne Bank staff helped him look at the numbers, the owner realized his business was doing similar volumes of business as before with takeout but with 30% fewer employees. The bank helped the restaurant get financing for tech upgrades to handle the takeout business and move forward, “and yet he was incredibly fearful coming into this conversation.”

On the ABA Banking Journal Podcast, Sorrentino discusses how bankers can help their business clients understand the post-COVID landscape and plot a financial path forward. He also offers advice about moving beyond coronavirus-related “political football” to have reasoned dialogue about what’s ahead and how businesses can help proactively. Listen to the episode.

Fed to Extend Lending Facilities Throughout Year-End

The Federal Reserve on Tuesday announced that it would extend several lending facilities that were set to expire on or around Sept. 30 to year-end. The extensions apply to: Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility, Primary Market Corporate Credit Facility, Secondary Market Corporate Credit Facility, Term Asset-Backed Securities Loan Facility, Paycheck Protection Program Liquidity Facility and Main Street Lending Program. The Fed’s Municipal Liquidity Facility is already set to expire on Dec. 31, and the Commercial Paper Funding Facility is set to expire on March 17, 2021. Read more.

Promontory Interfinancial Network Offers New Banking with Interest Podcast 

These past few months have seen rapid, unprecedented changes as firms grapple with the fallout of the coronavirus and resulting shutdowns, as well as civic unrest and questions about the future of financial services. It’s a tumultuous time, and it’s not easy to sort out the important information from the noise.

To make that easier, Promontory Interfinancial Network has started a podcast, Banking with Interest, which is dedicated to talking directly with experts about the forces reshaping financial services—and what the industry should be doing to meet the challenges of the moment.

Hosted by award-winning former journalists, Rob Blackwell and Barbara Rehm, the podcast features a wide variety of voices, including top executives at banks of all sizes, venture capitalists focused on the fintech space, and current and former regulators. Guests have included entrepreneur and Shark Tank co-star Mark Cuban, Lending Club Chairman and VC Hans Morris, Goldman Sachs’ Harit Talwar, ICBA Chairman Noah Wilcox, former CFPB Director Richard Cordray, influential community bank CEO Jill Castilla and many more.

To subscribe to the podcast, click here for iTunes, Spotify, Google Podcasts or Stitcher. You can also find all episodes available on Promontory Interfinancial Network’s homepage.

 Compliance Alliance

Question of the Week

Question: If our bank chooses to continue to impose the six-transfer limit as it used to be set out in Regulation D, does a telephone transfer count toward the six transfers per month? 

Answer: Yes, in general, these would usually have been counted in the six-transfer limit that used to be set out in Regulation D--there is one exception for withdrawals by phone when a check is mailed to the customer, but that is rarely the case. Like you point out, the bank is allowed to continue to impose these limitations, but make sure that any disclosures or other related materials no longer say that the bank is required to impose these as a matter of law. 

(2) The term “savings deposit” also means: A deposit or account, such as an account commonly known as a passbook savings account, a statement savings account, or as a money market deposit account (MMDA), that otherwise meets the requirements of §204.2(d)(1) and from which, under the terms of the deposit contract or by practice of the depository institution, the depositor is permitted or authorized to make no more than six transfers and withdrawals, or a combination of such transfers and withdrawals, per calendar month or statement cycle (or similar period) of at least four weeks, to another account (including a transaction account) of the depositor at the same institution or to a third party by means of a preauthorized or automatic transfer, or telephonic (including data transmission) agreement, order or instruction, or by check, draft, debit card, or similar order made by the depositor and payable to third parties. … Such an account is not a transaction account by virtue of an arrangement that permits transfers for the purpose of repaying loans and associated expenses at the same depository institution (as originator or servicer) or that permits transfers of funds from this account to another account of the same depositor at the same institution or permits withdrawals (payments directly to the depositor) from the account when such transfers or withdrawals are made by mail, messenger, automated teller machine, or in person or when such withdrawals are made by telephone (via check mailed to the depositor) regardless of the number of such transfers or withdrawals.4

Does the interim final rule require depository institutions to suspend enforcement of the six convenient transfer limit on accounts classified as "savings deposits"?
No. The interim final rule permits depository institutions to suspend enforcement of the six-transfer limit, but it does not require depository institutions to do so.

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