COVID-19 UPDATES
Register for ABA Virtual Washington Fly-In: Midwest Region
While the IBA’s Virtual Washington Trip reaches its conclusion this week, the need for grassroots advocacy continues on as bankers work to ensure the best possible environment for our customers and communities that are navigating the COVID-19 pandemic. Join with fellow bankers and industry leaders from across the Midwest for a virtual meeting with agency leadership. In partnership with state bankers associations, the ABA is hosting a Washington Fly-in to ensure policies crucial to the banking industry remain front and center, and to provide a forum for critical questions from your bank. You will not want to miss out on this opportunity to speak directly to regulators about the need for commonsense policies and smart reform that will help America’s banks better serve their communities and grow the economy.
The Midwest Regional Virtual Washington Fly-in begins Oct. 5 with an in-depth discussion with ABA experts on key issues facing our industry at the federal level, followed by discussions with:
ABA Federal Issues Briefing – 10/5 (12:00 – 1:30 p.m. EST)
FDIC Briefing with Chairman Jelena McWilliams – 10/5 (2:00 – 3:00 p.m. EST)
OCC Briefing with Acting Comptroller Brian Brooks – 10/6 (3:30 – 4:30 p.m. EST)
Federal Reserve Briefing with Federal Reserve Board Governor Michelle Bowman – 10/8 (9:00-10:00 a.m. EST)
CFPB Briefing with CFPB Director Kathy Kraninger - TBD
Register for ABA Virtual Washington Fly-In
FHFA, FHA Extend Foreclosure, Eviction Moratoriums to Year End
The Federal Housing Finance Agency announced last week that it would extend through Dec. 31, 2020, a moratorium on foreclosures and evictions for single-family mortgages backed by Fannie Mae or Freddie Mac. The current moratorium was expected to expire on Aug. 31. The Federal Housing Administration similarly extended through Dec. 31 its foreclosure and eviction moratorium for homeowners with FHA-insured single-family mortgages.
CFPB: About 6% of Mortgage Borrowers Receiving Coronavirus Relief
Around 6% of outstanding first-lien mortgages in June 2020 were reporting zero payment due based on credit bureau data, up from essentially none in February—thus indicating some kind of coronavirus-related payment relief, the Consumer Financial Protection Bureau noted in a report on early effects of COVID-19 on consumer credit. As would be expected, mortgage assistance was more likely to be reported in areas correlated with health and economic effects of COVID-19, including areas with greater shares of virus cases, greater shares of minority populations and higher levels of unemployment shock.
Credit card borrowers also reported receiving assistance at more than twice the normal levels, although the share reporting payment relief was edging down in June. Access to credit card loans remained relatively strong, with credit limits falling by less than 0.1%, principally for super-prime customers with already-high limits. While credit limits flattened for prime and near-prime borrowers, the pre-COVID upward trend in limits did not change for subprime borrowers.
And while financial institutions did close existing lines of credit and halt credit limit increases for open accounts, “these effects are very small in magnitude,” with “many of the account closings...on cards that were closed for inactivity,” the bureau indicated. As with other loan categories, credit card loans were less likely to go into delinquency post-COVID.
IRS Issues Guidance on Optional Payroll Tax Deferral
The IRS on Friday issued guidance for employers for the optional deferral of employee payroll taxes pursuant to an Aug. 8 executive order from President Trump. Described as optional for employers by Treasury Secretary Steven Mnuchin earlier this month, the deferral is available between Sept. 1 and Dec. 31, 2020, for the employee portion of Social Security tax withheld on those employees who earn less than $4,000 on a pretax basis during any biweekly pay period.
Under the guidance, the amount deferred is to be collected ratably by the employer over the period from Jan. 1 though April 30, 2021. A number of questions, including what happens when an employee leaves the employer during the deferral period, are not addressed in the guidance and are expected to be the subject of additional discussion.
Survey: Financial Firms Split on When COVID-19 Effects Expected to Ease
This summer, financial services organizations were split on when they expected the effects of COVID-19 on their organizations to lessen meaningfully. Roughly 40% expected them to lessen by the end of the year, and the same share expected that challenges would not ease until 2021 or later, according to a Crowe LLP survey on business challenges. About 19% reported they did not have enough data to make a projection.
Regardless of when COVID-19 effects ease, most banks are seeing hits to revenue. By summer, less than 10% of financial companies expected any increase in 2020 revenues over the previous year. Seven in 10 expected a decrease in revenues, with 14% predicting a severe decrease.
Over the course of the survey, top concerns among survey respondents were employee health and safety, decreased top-line revenue, the effects of lockdown orders, cost management and keeping up with regulatory changes.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.