Lenders and community groups say it's a mistake for the banking agencies to move forward during a national crisis. But Comptroller of the Currency Joseph Otting says updated Community Reinvestment Act rules would speed relief to neighborhoods and small businesses.
Measures that delay the Current Expected Credit Losses standard and reduce a community bank capital ratio are temporary, but the industry now sees an opening to argue that they should be permanent.
The agency proposed changes in December to how customer relationships affect the definition of brokered funds, which has big implications for banks that are not well capitalized.
Regulators point to traditional financial institutions as well-positioned to meet short-term credit needs during the coronavirus pandemic, but there are still a host of questions about whether the industry should try to compete with high-cost lenders.
The ICBA chief’s plea for a six-month halt to regulations not related to the pandemic followed similar calls by community groups and a key Senate Democrat.
The $2 trillion stimulus package, which the House passed earlier in the day, aims to expand Federal Reserve liquidity resources and provide financial institutions with some regulatory relief.
Regulators are allowing banks that implemented the loan-loss standard to forestall any capital hits until 2022.
The joint statement said examiners will not impede banks’ responsible efforts to offer open lines of credit, closed-installment loans or other products to borrowers dealing with fallout from the pandemic.
While analysts agree banks are in better shape than in 2008, lawmakers are dusting off a crisis-era tool used by the Federal Deposit Insurance Corp. to soothe potential liquidity fears during the coronavirus pandemic.
The $2 trillion deal passed by the Senate late Wednesday would aim to put banks and consumers alike on stronger financial footing as they weather the coronavirus pandemic.