Senate Republicans blocked legislation Thursday that would have prevented the federal Economic Impact Payments from being garnished for the payments of debts owed.
Without such legislation, credit union and banking trade groups have said they may have to allow court-ordered garnishment of the payments.
Saying that federal law hampers lending by credit unions, two senators have introduced legislation that would increase the loan maturity cap of 15 years on credit union loans to 20 years.
Sens. Tim Scott (R-S.C.) and Catherine Cortez Masto (D-Nev.) have pushed similar legislation in the past, but Cortez Masto said the pandemic has increased the need for credit unions to have more flexibility to offer loans to members.
Senate Banking Chairman Sherrod Brown (D-Ohio) intends to introduce his “Banking for All Act” again this year. It would allow anyone to set up a free bank account at a bank, credit union or Post Office. The bank account, known as a FedAccount, would serve as a digital wallet and would solve the problem of delivering stimulus payments and tax credits to citizens who do not now have bank accounts.
Republican senators this week introduced legislation that would prohibit large banks and credit unions from refusing to provide banking services to legal businesses. It is an attempt to prevent the Biden Administration from restarting Operation Choke Point, an Obama Administration project that was intended to hold financial institutions accountable for processing known fraudulent transactions. Republicans worry that approach would allow banks to avoid providing services to gun-related businesses and other controversial business ventures.
Financial regulators proposed in October codifying a policy statement that supervisory guidance does not create legally binding obligations. Senator Toomey (R-Pa) doesn’t think that goes far enough.
The Senate Appropriations Committee has released all of its FY21 spending measures. The Financial Services bill eliminates all funding for the Community Development Revolving Loan Fund. Proposed spending on CDFIs remains the same as the past year.
As the financial health of consumers deteriorates due to the pandemic, Senate Banking Committee ranking Democrat Sherrod Brown of Ohio said he is concerned that financial services regulators, including the National Credit Union Administration, are not prepared for a possible financial crisis.
Due to federal programs, credit unions and banks have experienced major changes to their balance sheets, which may push them across regulatory thresholds. Sen. Crapo wants regulators, including the NCUA, to use their discretion to minimize the impact of this problem.
Sens. Bernie Sanders and Kirsten Gillibrand introduced S.4614, legislation that would permit banking services in post offices. The services would include ATMs, low-cost checking accounts, low-cost savings accounts and low-interest loans.
The Senate Republican “skinny” economic stimulus bill failed to get the necessary votes to open debate on the bill. Since the bill failed, it is unclear whether Congress will enact any of the credit union priorities before leaving at the end of the month.