CU Trades Say Stimulus Legislation Provides Much-Needed Assistance

The new economic stimulus bill sent to President Trump late Monday night includes essential provisions that would assist credit unions in helping members weather the economic hardships caused by the pandemic, according to CUNA and NAFCU officials.

The House and Senate on Monday passed the 5,593-page bill, which combines the latest stimulus bill and the FY21 appropriations bills to keep much of the federal government funded through the end of the fiscal year.

The measure includes a new round of Paycheck Protection Program loans, as well as an unprecedented $12 billion for the Community Development Financial Institutions program and an extension of provisions affecting the NCUA Central Liquidity Facility.

“The legislation’s replenishing of the PPP loan program, as well as simplifying the forgiveness process, providing more CDFI funds, and extending reforms to the Central Liquidity Facility and troubled debt restructuring requirements will help credit unions and their members continue to overcome the financial impact of the pandemic,” NAFCU President/CEO B. Dan Berger said following final passage of the measure.

Earlier Monday, NAFCU and CUNA officials sent congressional leaders letter outlining how the bill would help credit unions.

The groups said provisions of the bill that simplify the loan forgiveness process for PPP loans will help alleviate some of the regulatory burden associated with the program.

“While credit unions are working with their members to assist them with the current loan form, the complexity of the forgiveness rules and application is posing challenges for many small businesses who may not have the staff or expertise for such a complex application, especially with the current economic challenges,” NAFCU Vice President of Legislative Affairs Brad Thaler wrote in a letter to House and Senate leaders.

CUNA and NAFCU also applauded provisions that will extend Central Liquidity Facility provisions in past stimulus legislation.

“These changes make the CLF more accessible to credit unions and expand the amount of liquidity NCUA could provide credit unions,” CUNA President/CEO Jim Nussle wrote in a letter to House and Senate leaders.

The trade groups said the extension of Troubled Debt Restructuring provisions in earlier stimulus legislation will help alleviate concerns about providing credit union members with flexibility in loan repayment.

“This extension safeguards consumers’ ability to obtain COVID-related loan modifications by giving credit unions the flexibility not to consider these modifications as troubled debt for supervisory purposes,” Nussle said. “The TDR extension ensures credit unions can meaningfully and effectively help financially distressed members.”

Nussle said the new legislation corrects an oversight in previous stimulus bills. Those bills contained tax credits related to employee retention, paid sick leave and dependent care leave. However, federal instrumentalities were prohibited from taking advantage of the tax credit. Since credit unions technically are federal instrumentalities, they were not able to take advantage of the tax credit. The bill passed Monday corrects that, he noted.

The two groups also flagged issues they said Congress may have to address next year. Nussle said while the new bill contains $284 billion in PPP funds, more will be needed. “This funding is much needed but likely insufficient to cover the need of struggling small businesses,” he wrote. “We urge Congress to consider additional PPP funding in 2021.”

And Thaler said the expanded unemployment assistance and second round of stimulus checks will result in a large increase in deposits at credit unions. That will cause a further drop in the NCUA Share Insurance Fund equity ratio. He suggested that Congress should consider providing additional investment authority for credit unions to help them manage the influx of deposits.