SDBA eNews

December 23, 2020

Congress Approves COVID-19 Relief Bill, Reauthorizes PPP

House and Senate lawmakers late Monday night passed a $900 billion bipartisan coronavirus relief package. President Donald Trump on Tuesday night suggested he might not sign the bill, calling it a “disgrace” and demanding a boost in payments to households.

The ABA has prepared a staff analysis for bankers of the provisions currently included in the 5,500-page bill that affect the banking industry. Among other things, the bill includes several ABA-backed provisions, including:

  • $284 billion in new funds for the Paycheck Protection Program, including a second draw option for prior PPP borrowers and $15 billion set aside specifically for first and second draws issued by community financial institutions, including community development financial institutions and minority depository institutions.
  • $12 billion in targeted emergency investments to help low-income and minority communities, including $9 billion to be used by Treasury to create an Emergency Capital Investment Program to make direct and indirect capital investments in low- and moderate income financial institutions.
  • A hold-harmless safe harbor for PPP lenders from enforcement and penalties to include all certifications made by borrowers or applicants connected to initial or second-draw PPP loans.
  • A simplified PPP forgiveness process allowing PPP loans of $150,000 or less to be forgiven after the borrower completes a one-page attestation.
  • Repeal of a CARES Act provision that required PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.
  • Enhancements of existing SBA loan programs, including the 7(a), 504 and microloan programs.
  • A new round of $600-per-person economic impact payments for eligible recipients (not subject to garnishment).
  • An extension of enhanced unemployment insurance.
  • An extension until Jan. 1, 2022, of the troubled debt restructuring provisions that were included in the CARES Act.
  • A delay of CECL implementation until Jan. 1, 2022.

In a statement ahead of the votes on Monday, ABA President and CEO Rob Nichols commended lawmakers on the bipartisan effort to draft the long-awaited stimulus bill. “The bipartisan agreement reached by congressional leaders will provide much-needed relief to families, workers, and businesses still struggling from COVID-19,” he said. “Importantly, this agreement contains several ABA-supported provisions that will allow banks to provide additional help to individual and business customers under financial stress from the pandemic.” Read the staff analysis For more information on the legislation, contact ABA's James Ballentine.

ABA Offers Resources, Talking Points on Relief Bill

The ABA has prepared a resource for banks to help them immediately prepare for the large number of EIPs that could be sent via ACH on the first day of processing—which could come as early as this weekend.

ABA is encouraging banks to take steps including planning to have call center and ACH operations staffing levels ready as well as ordering and moving sufficient cash to meet a surge in ATM and branch withdrawals as EIPs land in customer accounts. ABA has also prepared a set of talking points that address the EIPs, as well as other key provisions of the bill.

CDC Recommends Bank Workers Be in Third Phase of Vaccinations

A panel of the Centers for Disease Control and Prevention last Sunday voted to include financial services workers in Phase 1c of COVID-19 vaccinations. Under the recommendations of the CDC’s Advisory Committee on Immunization Practices, banking employees would be prioritized for vaccine doses alongside workers in sectors considered essential but with a substantially lower risk of exposure to COVID-19.

ABA strongly urged the committee to include frontline bank employees—such as tellers and loan officers—in Phase 1b, given their regular contact with the public. “We believe these frontline workers face the highest risk of infection, pose the greatest risk of spreading the virus if infected, and are absolutely essential, especially in communities where residents may not have access to electronic banking tools,” ABA said in a letter to the CDC last week.

Individuals in Phase 1a—health care personnel and nursing home residents—are already receiving vaccine doses. Phase 1b, which follows, will include Americans over 75 and frontline workers in emergency services, education, food, agriculture, manufacturing, corrections, postal delivery, public transit and grocery stores, according to the ACIP recommendations. In addition to financial workers, Phase 1c will include persons over 65 and those aged 16 to 64 with high-risk conditions, as well as workers in the transportation, food service, construction, IT and telecommunications, energy, media, legal, safety engineering and sewer and water industries.

State public health authorities will make their own decisions about vaccine prioritization based on the CDC recommendations. ABA and the state bankers associations will urge these officials to allow for vaccination for the frontline essential workers in the banking sector as early as possible alongside other essential workers. View the phase recommendations. For more information, contact ABA’s Paul Benda.

Free Article Examines Post-COVID Exam Expectations

Banks moved heaven and earth to help clients through COVID-19, making loans and handling modifications under a great deal of stress while also racing to make Paycheck Protection Program loans. What will examiners say as industry moves into a post-crisis environment in 2021?

An article from the forthcoming January/February 2021 issue of the ABA Banking Journal interviews experts on what examiners may find when reviewing fair lending compliance, troubled debt restructurings and credit risk changes. Documentation is critical to helping examiners understand decisions taken in response to the pandemic.

Tom Broughton of ServisFirst Bank said that the lender’s recent examination was unchanged from previous years, with examiners emphasizing that banks facing credit losses must take them. “If you have a problem, you need to go ahead and recognize it,” Broughton said. “A forbearance agreement is not going to stop a downgrade, and you need to downgrade the loan as you always have.” Read the article

Fed Proposes Reg D Changes

The Federal Reserve yesterday proposed changes to Regulation D, which addresses reserve requirements of depository institutions. The proposal would eliminate references to an “interest on required reserves” rate and to an “interest on excess reserves rate.” The Fed would replace these with a reference to a single “interest on reserve balances” rate.

In addition, the Fed also proposed to simplify the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks, among other things. Comments on the proposal are due 60 days after publication in the Federal Register.

Finally, the Fed adopted as a final rule a previously issued interim final rule lowering reserve requirement ratios on transaction accounts maintained at depository institutions to zero percent. The rule takes effect upon publication in the Federal Register. Read the proposed ruleRead the final rule.

FinCEN Proposes New Reporting Requirements for Crypto Transactions

With criminals increasingly turning to virtual currencies to move illicit funds, the Financial Crimes Enforcement Network last week proposed new requirements for certain transactions involving convertible virtual currency or digital assets with legal tender status, or LDTA. Under the rule, banks would be required to submit reports, keep records and verify the identity of customers in relation to transactions involving these types of assets that are held in both “hosted” wallets—those held at a financial institution—as well as in “unhosted” wallets, which are not hosted by a third-party financial institution.

Banks would be required to file a report to FinCEN with certain information related to a CVC or LTDA transaction and counterparty, and to verify the identity of their customer, if a counterparty to the transaction is using an unhosted or otherwise covered wallet and the transaction is greater than $10,000. Banks would also be required to keep records of a customer’s CVC or LTDA transaction and counterparty—including verifying the identity of their customer—if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000.

FinCEN noted that the proposal does not modify the regulatory definition of “monetary instruments” or otherwise alter existing Bank Secrecy Act regulatory requirements applicable to monetary instruments. Comments on the proposal are due Jan. 4. Read the proposal.

Banks Use Video Software to Host Santa Visits

While a visit from St. Nicholas is a much-loved tradition at many bank branches, social distancing has led banks to cancel these visits. A new article on ABA Bank Marketing speaks with banks that are using their virtual video banking solutions to host free Santa visits for kids.

“Bank employees stepped up with beards and red suits to channel as much Santa cheer as could possibly transfer through computer screens to appreciative families,” wrote Craig Colgan. “Families made appointments and simply downloaded an app or clicked on a web link to connect to Santa from their living rooms.”

At StonehamBank in Stoneham, Mass., for example, an employee dressed as Kris Kringle used its Face2Face video banking app to connect with families. “This year is looking a lot different for families and we wanted to find a way to spread holiday cheer safely,” said CEO Edward F. Doherty Jr. “We had an overwhelming response to this event. Our team was so happy we were able to offer this to our community members.” Read the article.

Happy Holidays from the SDBA

The team at the South Dakota Bankers Association wishes everyone peace, joy and prosperity throughout the coming year. Thank you for your continued support and involvement in our association. We look forward to working with you in the years to come.

During the holiday season, we like to thank our membership by making donations to worthy causes. The SDBA this year has made donations to Make-A-Wish South Dakota and Capital Area United Way.

The SDBA Office will be closed on Thursday and Friday, Dec. 24-25. We will reopen on Monday, Dec. 28. May the holiday spirit be with you and your loves ones today and throughout the new year.

 Compliance Alliance

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