House bill would let smaller banks exclude PPP loans from asset totals

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WASHINGTON — House lawmakers have introduced a bill to exclude Paycheck Protection Program loans from regulators' calculations of the asset size of smaller banks.

The legislation, introduced Friday, would benefit banks and credit unions with assets under $15 billion. It requires federal regulators to exclude PPP loans from asset-size calculations for the purpose of determining capital ratios, deposit insurance premiums and other asset thresholds at those financial institutions. PPP loans, which are administered by the Small Business Administration, would not be excluded from assets on the institutions' quarterly call reports.

“The purpose is to make sure that banks and credit unions are not subjected to more burdensome regulations as a result of assisting with an emergency economic relief program,” a spokesperson for Rep. Barry Loudermilk, R-Ga., one of the co-sponsors of the legislation, said in an email.

PPP loans, which are administered by the Small Business Administration, would also be excluded from assets on the institutions' quarterly call reports.
PPP loans, which are administered by the Small Business Administration, would also be excluded from assets on the institutions' quarterly call reports.

The legislation comes in response to community bankers’ worries that their newly swollen balance sheets may trigger new regulatory requirements. Banks nearing $10 billion in assets have been particularly concerned that PPP loans could subject them to Consumer Financial Protection Bureau supervision.

“We understand that there are 178 banks on the verge of crossing an asset-based regulatory threshold as a result of PPP loans remaining on their balance sheets,” Loudermilk’s spokesperson said.

Other co-sponsors of the bill are Reps. David Scott, D-Ga., Frank Lucas, R-Okla., Steve Stivers, R-Ohio, Roger Williams, R-Texas, Ted Budd, R-N.C., David Kustoff, R-Tenn., Trey Hollingsworth, R-Ind., John Rose, R-Tenn., Denver Riggleman, R-Va., and Van Taylor, R-Texas.

The Paycheck Protection Protection, which was established by Congress in March, enabled small businesses that were impacted by the pandemic to access forgiveable loans in an effort to stave off layoffs.

This article originally appeared in American Banker.
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Paycheck Protection Program Small business lending Coronavirus Regulatory relief Capital requirements House Financial Services Committee SBA
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