7.31.20
On July 31, Senator Mike Crapo (R-ID), Chairman of the Senate on Banking, Housing, and Urban Affairs, sent two separate letters to federal financial regulators, urging the extension and expansion of crucial economic relief provisions in the CARES Act. A letter to the Federal Reserve and Treasury urged for the expansion of the Main Street Lending Program by setting up an asset-based lending and commercial real estate programs. Doing so would provide Treasury and the Fed more flexibility to take risks and extend the collateral and emergency lending facilities.
In a separate letter to housing finance and prudential regulators, Senator Crapo recommended regulators use their existing authority to extend relief provided in the CARES Act. Assistance is explicitly requested for the Community Bank Leverage Ratio, Troubled Debt Restructurings (TDRs), and the Current Expect Credit Losses (CECL) methodology. (Note: the letter states, “it would also be prudent to extend relief related to TDRs and CECL to insurers and nonbanks that engaged in similar activities to banks and credit unions that are equally affected by these policies during this difficult time.”) The letter also requested extensions for the moratorium on single-family home foreclosures and evictions and forbearance on multifamily property mortgages backed by Fannie Mae and Freddie Mac, beyond the current period of six months.
On August 4, Chairman Crapo proposed amendment language providing further clarification for regulators. The language seemingly attempts to clarify that 13(3) facilities should be more aggressive in providing credit and liquidity to eligible businesses, states, and municipalities, even if it means taking losses. It would also provide temporary authority to bank regulators to make temporary adjustments to the method of calculating leverage capital requirements with certain time limitations on how long temporary adjustments can be sustained.
Congressional leaders and the White House have yet to agree on a final package so it is unclear whether the Senate will end up voting on the amendment.
Read Senator Crapo’s proposed amendment here.
Read the letter to the Federal Reserve and Treasury Department here.
Read the letter to housing finance and prudential regulators here.
For more information please contact Leslie Sack, Managing Director, Head of Government Relations or Ben Parish, Vice President, Government Relations