COVID-19 UPDATES
Senate Stimulus Plan Includes PPP Reforms
Senate Republicans have released initial proposals for the next round of stimulus legislation that include several industry advocated provisions.
The HEALS Act (Health, Economic Assistance, Liability Protection and Schools Act) includes Paycheck Protection Program reforms including safe harbor protection for PPP lenders, automatic forgiveness for loans under $150,000 with borrower attestation, and a streamlined forgiveness process for loans between $150,000 and $2 million.
The legislative package – introduced by several Senate committee chairs – includes measures providing liability protections from COVID-19-related lawsuits, agriculture support and more. It also would provide a second round of direct checks for Economic Impact Payments, extend unemployment compensation and expand the employee retention tax credit.
The PPP provisions introduced by Sens. Marco Rubio (R-Fla.) and Susan Collins (R-Maine) would let certain small businesses apply for a second round of PPP loans. The Small Business Administration could reimburse lenders for 3% of the principal amount up to $350,000 and 1% of the principal thereafter.
Small businesses with no more than 300 employees that can demonstrate a 50% reduction in revenue would be eligible for the second PPP round, which would draw on a combined $190 billion in existing and newly appropriated funds.
The plan also includes a 7(a) loan program that would provide for 20-year loans up to $10 million at a rate of 1% to borrowers and 300 basis points over SOFR to lenders, or roughly 3.1%. The SBA would guarantee 100% of the loans and would be required to reduce barriers to selling the loans on the secondary market.
FDIC Eases Barriers to Bank Jobs for Applicants with Certain Prior Records
The Federal Deposit Insurance Corp. on Friday finalized an industry-supported rule codifying as regulation the agency’s statement of policy regarding the implementation of Section 19 of the Federal Deposit Insurance Act. Section 19 prohibits persons convicted of a criminal offense involving dishonesty, breach of trust, or money laundering from being employed by financial institutions without prior written consent of the agency.
The final rule narrows the scope of crimes subject to Section 19, reducing barriers for individuals with prior criminal records who are seeking employment at financial institutions, while protecting the integrity of the banking system. Specifically, the rule exempts all individuals whose covered offenses have been expunged from submitting an application to the FDIC and makes changes to the current de minimis exception for certain offenses.
“Since the beginning of 2017, the FDIC has approved every Section 19 application that would qualify for relief under the final rule without controversy,” said FDIC Chairman Jelena McWilliams. “While not major in scope, the changes in the final rule will have a major impact on individuals who no longer need to obtain written consent from the FDIC in order to work for a bank.”
Read a fact sheet on the final rule
Fed Issues Final Rule on Confidential Supervisory Information
The Federal Reserve on Friday finalized changes to its procedures for responding to Freedom of Information Act requests and its treatment of confidential supervisory information (CSI). The final rule – which reflects feedback from industry stakeholders – implements technical, clarifying updates to the Fed’s FOIA procedures and its disclosure of CSI.
Among other provisions, the final rule adopts a standard used by the Office of the Comptroller of the Currency that permits supervised financial institutions to disclose CSI with directors, officers and employees, as well as outside legal counsel and auditors under certain circumstances. The Fed also removed an existing requirement for financial institutions to obtain prior Fed approval before disclosing CSI to other service providers such as consultants, contractors and contingent workers. The final rule takes effect 30 days after publication in the Federal Register.
Action Alert: Ask the Senate to Simplify Forgiveness for PPP Loans $150,000 and Under
The IBA is asking members to contact their senators in an effort to increase support for S. 4117, the Paycheck Protection Program Small Business Forgiveness Act. This bill has broad support from national trade associations and state banking associations across the country. Please contact your senators today and ask for their support to pass this legislation that will expedite the forgiveness process for the majority of borrowers that received loans through the PPP.
ICYMI - U.S. Mint Calls on Consumers to Help Address Coin Circulation Slowdown
With the COVID-19 pandemic disrupting the circulation of coins nationwide, the U.S. Mint has called on the public to pay with exact change and return any spare change to circulation by depositing coins, exchanging them for bills at a financial institution or taking them to a coin redemption kiosk.
“In normal circumstances, retail transactions and coin recyclers return a significant amount of coins to circulation on a daily basis,” the Mint noted in a statement. “However, precautions taken to slow the spread of the virus have resulted in reduced retail sales activity and significantly decreased deposits from third-party coin processors, resulting in increased orders for newly minted coins. Simply put, there is an adequate amount of coins in the economy, but the slowed pace of circulation has meant that sufficient quantities of coins are sometimes not readily available where needed.”
To further address the slower circulation, the Mint reports 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.
Additionally, Sherri Reagin of North Salem State Bank serves on the 22-member U.S. Coin Task Force, one of only three bankers nationwide represented. She was interviewed in the July 22 edition of Marketplace.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.