COVID-19 UPDATES
Indiana Banks Help Process Nearly $10 Billion in PPP Loans
The Small Business Administration has released updated PPP loan statistics as of June 27. Nationwide, 4,798,187 loans have been processed by 5,458 lenders, totaling $518,855,402,128 in net dollars. In the Hoosier state, Indiana banks have assisted in processing 77,872 loans to small businesses for a total of $9,457,392,872 in net dollars.
The Paycheck Protection Program loan program ends tonight, June 30, at 11:59 p.m. EDT. As of midnight, loan applications will no longer be accepted.
OCC Warns of Compliance Risk as Banks Adapt to COVID-19 Changes
The Office of the Comptroller of the Currency has cautioned banks to be vigilant about compliance risks that could arise as a result of their response to the coronavirus pandemic. In its Semiannual Risk Perspective—which was compiled between April and June as state and local economies began to reopen—the OCC noted that “compliance risk is elevated due to a combination of operations, employees working remotely, and the requirement to operationalize new federal, state and proprietary programs designed to support consumers,” including the Paycheck Protection Program and other relief efforts.
“The volume of change and short timelines for implementing changes placed additional strains on banks already operating in a stressed environment,” the OCC noted. “Bank risk management programs should maintain effective controls for third-party due diligence and monitoring and other oversight processes, operational errors, heightened cyber security risks, and potential fraud related to stimulus programs.”
The OCC acknowledged that banks were well-positioned at the outset of the pandemic. However, the report noted that credit risk has increased sharply as economic conditions deteriorated earlier in the year, stressing banks’ balance sheets. “Banks should update their portfolio management practices regarding stress tests to incorporate both the direct and indirect impacts of changing economic and market conditions,” the OCC indicated.
The OCC also flagged interest rate risk, operational risks related to banks’ COVID-19 response, heightened cyber risks and compliance risks related to BSA/AML, consumer compliance and fair lending as areas of concern.
GSEs Extend Forbearance Agreements for Multifamily Property Owners
The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac will extend forbearance agreements for multifamily property owners with enterprise-backed mortgages for up to three months, for a total forbearance of up to six months. While properties are in forbearance, landlords must suspend all evictions for tenants unable to pay rent.
At the conclusion of the extended forbearance period, borrowers may qualify for up to 24 months to repay the missed payments. During the repayment period, borrowers are also required to provide tenants with at least a 30-day notice to vacate, not charge late fees or penalties for nonpayment of rent and allow the tenant flexibility to repay back rent over time and not in a lump sum.
CDC Posts Information for Banks, Bank Employees
The Centers for Disease Control and Prevention has posted webpages for bank employers and employees with tips for protecting staff and slowing the spread of COVID-19. The tips for bank employers include creating a COVID-19 workplace health and safety plan, conducting a hazard assessment and developing hazard controls.
Among these controls are engineering controls (isolating workers from hazards through workspace distancing and transparent shields, as well as adjusting HVAC ventilation and adding filtration) and administrative controls (including changing workflows and practices, cleaning facilities and encouraging cloth face coverings as appropriate). “For most bank employees, an OSHA exposure risk level of ‘low’ is appropriate,” the CDC indicated, with personal protective equipment “not recommended for employees in the lower exposure risk group.”
View webpage for bank employers
View webpage for bank employees
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.