WASHINGTON–NAFCU has told Congress to disregard accusations made banking industry trade groups, saying it’s unfortunate the bankers don’t want to “maximize financial assistance for…vulnerable individuals during the current public health and economic crises.”
Separately, both NAFCU and CUNA have sent letters to the SBA seeking additional guidance related to the Paycheck Protection Program.
On Capitol Hill, NAFCU has responded to statements by the American Bankers Association and the Independent Community Bankers of America (ICBA), both of which have blasted NCUA for its decision to approvethe counting qualified service members who live on military bases at home and abroad when designating a low-income credit union.
To qualify as a low-income credit union, a majority of a credit union’s membership must meet certain low-income thresholds, based on data from the Census Bureau and requirements outlined in the NCUA’s Rules and Regulations.
Under the new approach, military personnel will now be considered in a similar manner as students attending colleges, universities, vocational or technical schools when the NCUA evaluates a federally insured credit union’s low-income designation, the agency said.
Banker Response
In its response, ICBA President Rebeca Romero Rainey said, in part, the NCUA decision benefits “neither low-income Americans nor military personnel—but the largest, most growth-obsessed credit unions, which continue to be subsidized by taxpayers. The NCUA's changes—made without a formal rule subject to public review and comment—is another example of this captive regulator expanding the powers of credit unions well beyond the limits established by Congress to justify their tax exemption.”
NAFCU Response
In a letter to Capitol Hill, NAFCU’s Brad Thaler wrote, “As the country faces a period of financial uncertainty, the NCUA’s decision is an important step toward promoting financial inclusion that fits with the goals of the low-income designation for credit unions. Under the prior policy, members of the military with physical street addresses would be included in the NCUA’s income assessment tool, but those with Army/Air Post Office (APO) or Fleet Post Office (FPO) mailing addresses were not. The NCUA’s decision to use APO and FPO addresses in their evaluation will ensure those in the military, who are often younger, starting out in their careers, frequently mobile, and can be targets for unscrupulous predatory lenders, will be included in the calculation of those who may need access to additional services, similarly to how students are now included.
“It is disappointing that banking trade groups, in their efforts to stifle competition and maximize profits, would oppose efforts to maximize financial assistance for these vulnerable individuals during the current public health and economic crises,” Thaler continued. “This is the same banking industry that just saw its two most profitable years in history in 2018 and 2019. While banking trades choose to attack efforts to do more to help our nation’s military members during these uncertain times, credit unions will continue their focus on providing the best products and services to American consumers. We hope that the banks will refocus their efforts and do the same.”
Letters to SBA
Meanwhile, both CUNA and NAFCU have sent letters to the Small Business Administration (SBA) urging it to issue additional guidance to ensure credit unions can properly assist their members and provide loans through the Paycheck Protection Program (PPP).
NAFCU Regulatory Affairs Counsel Kaley Schafer said the trade group appreciates the SBA’s decision to allow a dedicated submission window for lenders under $1 billion and urged the agency to continue to provide equitable access for smaller lenders should Congress appropriate future rounds of funding.
Schafer also requested transparency on the pacing mechanism – announced and implemented by the SBA during the second round of program funding – to “ensure credit unions can communicate delays to borrowers.”
Clarification Needed
On PPP loan forgiveness, Schafer called on the SBA to clarify questions in a number of areas, including:
- How the SBA will calculate forgiveness for borrowers
- What the timeframe will be for borrowers to submit an application for forgiveness
- The necessary documentation that will be required when acquiring forgiveness
- Lender requirements after the loan forgiveness has been made and a balance remains
Other Guidance Needed
Schafer also reiterated the need for guidance on the reimbursement of lender fees and the sale of PPP loans to the secondary market and the SBA.
“Further guidance will assist credit union lenders in continuing to aid small businesses during the COVID-19 pandemic,” Schafer concluded.
CUNA Letter
Separately, CUNA also submitted comments to the Small Business Administration (SBA) in response to the request for comment regarding the implementation of the PPP.
“Our concerns encompass issues extending to the loan forgiveness process, purchase of loans, and liability to our member credit unions for making loans,” said CUNA Senior Director of Advocacy and Counsel Senior Counsel for Payments and Cybersecurity addressed Lance Noggle. “As the program continues to mature, and possibly get an extension by Congress, we strongly urge the SBA to be forward-looking and to cuna.org make adjustments to the program to protect lenders from looming threats.”
CUNA called on the SBA to:
- Clarify that all credit unions, including privately insured state-chartered credit unions, are eligible to be PPP lenders
- Address lender prioritization of borrowers and discretion in choosing borrowers throughout the process
- Issue a final rule or guidance formalizing the policy that non-SBA forms will not impact lender or borrower rights under PPP
- Develop guidance on the process that it will use to purchase PPP loans from lenders. Questions SBA should address include the proper forms that should be used and the limitation on timing and methods for handling sold loans that become problematic or develop other issues
- Issue a template or form clearly explaining the level of detail required in reports to the SBA requesting advance purchase of a PPP loan. Specific issues this template or guidance should address are how a lender must determine alternatives along with the number of alternatives
- Address lender liability stemming from PPP loans
- Provide details on lender due diligence or validation lenders will be required to conduct on borrower submissions so lenders can start the process of planning for forgiveness requests. This guidance should include methods on how financial institutions should calculate partial forgiveness requests when a borrower does not meet the 75% threshold for forgivable payroll costs.