Credit unions have received some relief and guidance as they continue to serve members amid the coronavirus pandemic.
And even more relief could be on the way.
Congress is currently out of session and will not return until it's deemed safe for lawmakers to work. Still, they could return earlier than expected, especially if problems arise with the implementation of the CARES Act or if they decide they need to pass an additional stimulus package.
One of the key provisions in the CARES Act is the paycheck protection program, which provides $349 billion in loans to small business through the Small Business Administration. The legislation also delays the implementation date for the Financial Standards Accounting Board’s current expected credit loss standard, though trade groups have called on the National Credit Union Administration to push that date back until at least 2024.
There’s already ample discussion of what a phase four bill could look like, according to Ryan Donovan, chief advocacy officer at the Credit Union National Association. There have been murmurs of providing supplemental assistance in addition to what has already been approved by Congress. House Speaker Nancy Pelosi is already referring to the potential aid as “CARES 2.”
But financial institutions and small businesses have raised concerns regarding the implementation of the paycheck protection program.
Community First Credit Union told a local Wisconsin news station that the institution already has fielded hundreds of calls about the program. Many banks and credit unions have yet to get their systems up and running.
“One of the things that folks are concerned about is that the money is going to run out very quickly and not everyone is going to have access to [the PPP],” Donovan said. “But the comments from the speaker and the president should provide some comfort that if the funds are exhausted and the need remains, that’s something that’s high on the priority for Congress.”
More relief may become necessary as unemployment continues to increase. Data from the National Association of Federally-Insured Credit Unions March Flash Report outlined the grim reality of America's current unemployment. Nearly 10 million Americans filed for unemployment within the last two weeks of March.
“The March jobs report captured more job losses than was expected, but it is still nowhere close to the present level of unemployment,” Curt Long, NAFCU's chief economist and vice president of research, said in a statement.
The industry may get further relief from regulatory agencies, including NCUA and the Financial Crimes Enforcement Network. On Friday FinCEN suspended its February ruling related to currency transaction reports. That rule clarified reporting requirements for financial institutions.
NCUA also issued a joint policy statement with other financial regulators that encouraged mortgage servicers to work with homeowners impacted by COVID-19. Specifically, servicers must provide a CARES Act forbearance that allows a borrower to defer paying their mortgage for up to 180 days and potentially even longer.
