WASHINGTON–A potential phase IV federal stimulus package could include broad prohibitions on evictions of renters, a foreclosure moratorium, liquidity for mortgage servicers, $2,000-per-month checks to many Americans, and up to $1 billion in CDFI funds, according to a draft proposal circulating on Capitol Hill and provided to CUToday.info.
There continues to be debate around whether another round of stimulus spending is going to be needed in the wake of three prior pieces of legislation, including the recently enacted $2-trillion CARES Act. But many have said despite the costliest piece of legislation passed in U.S. history, the funds are inadequate to bring about a recovery from the effects of the coronavirus pandemic on the U.S. economy.
‘Just a Downpayment’
A memorandum sent to Democratic members of the House Financial Services Committee described the CARES Act as just a “down payment on the relief that is needed” and outlines a series of policy prescriptions aimed at doing seven things in broad terms:
- Provide support to renters, homeowners, and those experiencing homelessness
- Help families and protect consumers
- Assist small and minority-owned businesses, and nonprofits
- Assist community financial institutions
- Support state, territory, tribal, and local governments
- Promote financial stability and market transparency
- Strengthen oversight, transparency, and accountability of the administration of taxpayer funds
More Specifics
Specifically, the Financial Services Committee memo provided to CUToday.info includes a long list of new provisions, many of them Democratic priorities that are certain to get strong pushback from Republicans in the Senate.
Those provisions include an eviction ban for all renters, the establishment of an emergency rental assistance fund, suspension of work and other requirements for those in public housing, financing for hotels and motels to house the homeless, a foreclosure moratorium, repossession ban and forbearance for all homeowners, liquidity for mortgage servicers, and a homeowner assistance fund.
Infrastructure, Payments to Americans
In addition, the memo calls for passage of an Infrastructure Act that would invest in housing, including low-income housing; the creation of an Infrastructure Bank; reinstatement of the FHA/FFB partnership; neighborhood revitalization efforts, and extension of the GSE qualified mortgage (QM) patch.
As the coronavirus pandemic continues, the memo urges $2,000-per-month (plus $1,000 per child) payments to most Americans, along with no-fee accounts for the underbanked to deposit the funds; a requirement that banks and credit unions cash stimulus checks for free; suspension of negative credit reporting; preservation of state consumer protections over credit reporting; a prohibition on debt collections; protections for private student loan borrowers; a waiver of “big bank fees like overdrafts,” and more.
As the economic recovery continues, the proposal calls for $10,000 in loan forgiveness to private student loan borrowers (at a cost of $60 billion); greater financial literacy programs, and disclosures and protections for student borrowers when payments resume.
Moreover, the proposal includes a host of additional assistance to small businesses, minority businesses and nonprofits, support for municipal government financing and investments in persistent poverty areas, $1 billion for the CDFI Fund and up to $10 billion for a Community Development Block Grant program.
The Cost
The estimated cost of the laundry list of proposals in the memo is at least $1 trillion, but any legislation is likely to be amended and significantly changed if it is to get through Congress.
As is reported elsewhere on CUToday.info today, both credit union trade groups have indicated that for any legislation to advance Congress will need to reconvene. Congress is currently in recess due to the coronavirus.