Week ahead: PPP returns as unemployment rate remains unchanged

Some credit unions will get another chance to take advantage of the Small Business Administration’s Paycheck Protection Program this week.

Community financial institutions, including those designated as minority depository institutions and community development financial institutions, will gain access to PPP this week. That includes some credit unions with those designations, though that represents only a portion of the total industry. Other credit unions and FIs under $10 billion in assets won’t have access until later, but this round of the program contains incentives for smaller lenders.

However, some financial services executives have also raised questions regarding the application process, access for lenders who are previous participants and whether the program will have enough funds to run through the end of March, as scheduled.

The latest round of PPP comes as the unemployment rate remains stalled at 6.7%, following a report Friday of 140,000 job losses in November, much of which was concentrated in the hospitality industry, according to analysis from the National Association of Federally-Insured Credit Unions.

“December’s employment report fittingly capped a bizarre and painful year,” said Curt Long, NAFCU’s chief economist. “Areas like construction, manufacturing, and even retail showed strong gains during the month. The headline number will keep Congress on track to provide more fiscal relief, but the underlying figures still support the view that the economy can recover fairly quickly once vaccines are more widely distributed.”

Members of both the House and Senate are in their home districts this week, with no major credit union-related issues on the docket for committees in either chamber. However, following the Jan. 6 rioting at the U.S. Capitol, members of the House could return to Washington within the next two days to vote for the second time on whether or not to impeach President Trump.

All branches of Congressional Federal Credit Union and U.S. Senate FCU that were impacted by rioting at the Capitol have reopened, according to those institutions’ websites.

Lastly, the National Credit Union Administration will tackle one of its longest-running challenges when holds its January board meeting Thursday. The agency’s push to overhaul capital rules for the industry is set to continue, with risk-based net worth for complex credit unions on the docket for this month’s meeting. The proposed rule would temporarily raise the threshold for defining a credit union as “complex” by raising the asset threshold to $500 million or more and the risk-based net worth requirement to 6% or more. However, if adopted, that change would only be temporary and would stay in place until broader risk-based capital requirements take effect.

The board on Thursday is also expected to discuss plans to simplify risk-based capital requirements, issue a final rule on corporate credit unions that ties back to last month’s final rule on subordinated debt and more.