SDBA eNews

November 19, 2020

ABA, Trade Groups Call for Halt to PPP Loan Necessity Questionnaires 

The ABA on Tuesday joined a broad coalition of groups from various industries in a letter to the Small Business Administration and Treasury Department raising concerns about the loan necessity questionnaires that SBA is using to evaluate borrowers’ good-faith certification of their economic need for Paycheck Protection Program loans.

SBA rolled out the questionnaires—which included separate versions for nonprofit and for-profit entities—last month to borrowers with loans totaling $2 million or more. However, the groups noted that the forms ask for information—such as quarterly revenue and employee earnings—that is unrelated to what borrowers were asked to consider when they applied for their PPP loan.

Accordingly, the questionnaires “introduce a confusing and burdensome process for both borrowers and lenders, and we fear that it could lead the agencies to inappropriately question thousands of qualified PPP loans made to struggling small businesses,” the groups said. They requested that SBA and Treasury temporarily suspend use of the questionnaires, which are currently out for public comment until Nov. 25, “while we collectively address these issues and work together toward a better solution.”

The groups further detailed their concerns in a letter to congressional leaders. “We strongly encourage you to ensure that all agency review processes are necessary and appropriate to avoid undue burden on borrowers and lenders, possible bias and subjectivity, or concerning departures from requirements borrowers and lenders understood from the statute and original implementing guidance,” the groups told lawmakers. “We do not believe that the information collection sought by the new loan necessity questionnaires achieves this appropriate balance.” Read the letter to SBA/Treasury. Read the letter to lawmakers.

ABA Calls for Extension of CARES Act Relief

The ABA on Tuesday urged lawmakers to consider extending several banking-related CARES Act provisions that are set to expire at year-end. These include temporary relief from troubled debt restructurings, optional temporary relief from CECL implementation, a temporary lending limit waiver and temporary regulatory capital relief for community banks.

“Banks of all sizes will continue to support their communities as the recovery continues, and we hope your committees can assist by providing additional tools,” the ABA wrote. “Although several other committees are also considering issues important to the customers and communities served by America’s banks, extension of these key, temporary changes is critical to empower banks to continue to assist those in need.” Read the letter.

PPP, EIDL Data Release Temporarily Delayed

A few days shy of a court-ordered Nov. 19 deadline for the Small Business Administration to release the names, addresses and precise loan amounts for all Paycheck Protection Program loan recipients and all COVID-19-related Economic Injury Disaster Loan recipients, the federal judge who issued the order temporarily stayed it.

The temporary stay was issued until SBA’s request for a full stay of the order is resolved. The plaintiffs in the case—two news organizations seeking the data under the Freedom of Information Act—have until Nov. 27 to respond to SBA’s latest request. SBA said it is considering an appeal of the order.

Earlier this year, SBA released less specific information about PPP loans to protect the personal financial information of borrowers and their employees. For loans totaling $150,000 and higher, SBA released the names and addresses of borrowers but provided a range for loan totals; for smaller loans, it released the exact amount and name of the lender but not the identity of the borrower.

ABA Survey: 51% of Ag Borrowers Profitable in 2020

Amid ongoing stresses in the ag sector and economic dislocation from the COVID-19 pandemic, lenders reported that just under 51% of their agricultural borrowers were profitable in 2020, a decline of six percentage points from the prior year, according to the latest agricultural lenders survey conducted by ABA and Farmer Mac. About half of the lenders, 49%, said do not expect borrower profitability to improve in 2021 and respondents expressed the most concern about the grain, dairy and cattle sectors.‌

Credit quality and the deterioration of agricultural loans were ranked as the top concerns facing lenders in 2020 for institutions of all sizes and across all regions. Competition from other lenders and weak loan demand were also ranked as leading concerns. Nearly 60% of lenders said they expect delinquencies to increase for agricultural production loans over the next year. Nearly three in five lenders reported that demand for agricultural production loans was flat over the last six months.

Despite the negative outlook on average, lenders approved approximately 72% of agricultural loan applications received over the last 12 months. Over the next 12 months, lenders said they expect to approve 88% of renewal requests. Read the survey report

FSB Report Warns of Systemic Risks in Nonbank Financial Sector

The turmoil observed in global financial markets earlier this spring during the COVID-19 pandemic highlighted the need to “strengthen the resilience in the [nonbank financial intermediation] sector,” according to a new report from the Financial Stability Board.

While acknowledging that certain parts of the financial sector, “particularly banks and financial market infrastructures, were able to absorb rather than amplify the macro economic shock,” the report warned that “the financial system remains vulnerable to another liquidity strain, as the underlying structures and mechanisms that gave rise to the turmoil are still in place.” Such activities include significant outflows from non-government money market funds and other specific types of open-ended funds, redistribution of liquidity from margin calls, dealer intermediation in core funding markets and dislocation in key government bond markets, the report noted.

FSB said it will work to examine and address specific risk factors and markets that amplified the economic shock brought on by the pandemic, increase its understanding of systemic risks in NBFI (the FSB’s term for the shadow banking sector) and assess policies to address these systemic risks. Read the report

Podcast: Celebrating Bankers' Community Commitment

The latest episode of the ABA Banking Journal Podcast continues a pre-Thanksgiving tradition by interviewing the winners of ABA’s 2020 Community Commitment Awards. Each interview explores the winning program or initiative at each bank and provides insights on how they might be implemented or adapted at other banks. These stories present the perfect inspiration as we prepare for the season of thanks and giving.

The full episode presents excerpts from each interview. To listen to the full conversation with each Community Commitment Award winner, click on the links below.

  • Affordable housing: Joseph Hernandez, SVP and CRA officer, TIAA Bank, Jacksonville, Florida.
  • Community and economic development: Ira Robbins, president and CEO, Valley Bank, Wayne, New Jersey.
  • Economic inclusion: Tom Kenning, CAO, Alpine Bank, Glenwood Springs, Colorado.
  • Financial education: Kenneth Pabón Astor, coordinator, Finanzas en Tus Manos, Banco Popular, San Juan, Puerto Rico.
  • Protecting older Americans: Lesley Palmer, managing director, community relations, and Casey Waltz, executive director, social media and digital strategy, Mizuho Americas, New York City; and Jeremy Kaplan, executive director, Encore Community Services.
  • Supporting military families: Sammy Stuard, president and CEO, and Charlie Koon, VP and director of military and corporate business development, F&M Bank, Clarksville, Tennessee.
  • Volunteerism: Jim Vaccaro, president and CEO, Manasquan Bank, Wall, New Jersey.

Listen to the full episode

FinCEN Director to Keynote Financial Crimes Enforcement Conference

Financial Crimes Enforcement Network Director Ken Blanco will join the keynote speaker lineup at the ABA/ABA Financial Crimes Enforcement Conference to be held virtually Dec. 8-10. In addition to other keynote speakers, including FBI Director Christopher Wray, Wirecard CEO James Freis and former senior counter-terrorist financing official Juan Zarate, the conference—the only national event that focuses exclusively on financial crimes facing banks—will feature 25 breakout sessions, all of which will be available for on-demand viewing after they debut.

Breakout sessions will cover a wide range of financial crimes topics, including financial system integrity, insider threats, emerging financial crimes technologies, cyber crime typologies and virtual currency risk exposure, as well as COVID-19 effects on fraud, customer due diligence and anti-money laundering program governance. View the conference program. Register for the conference.‌

SDBA 2021 Advertising & Sponsorship Planning Guide Available 

The SDBA's 2021 Advertising & Sponsorship Planning Guide is now available. The guide contains information about advertising in SDBANKER Magazine, the South Dakota Bank Directory and classified advertising. It also provides information on sponsoring the SDBA eNews and sponsorship and exhibit opportunities at SDBA events throughout the year. The SDBA encourages business partners to view the guide to see how they can get involved in the SDBA in 2021. View the guide

Happy Thanksgiving from the SDBA

This Thanksgiving may your blessing be many and your worries be few. May you find reasons to give thanks when each day is anew.

The SDBA office will be closed on Thursday and Friday, Nov. 26-27, and will reopen on Monday, Nov. 30. Happy Thanksgiving from all of us at the SDBA.

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Contact Alisa Bousa, SDBA, at 605.224.1653 or via email.