House Members Push for Legislation to Extend Credit Union Provisions of Stimulus Bill

A group of House members is pushing their leaders to extend two provisions of coronavirus economic stimulus laws that the group says is crucial to the ability of banks and credit unions to help their customers and members weather the pandemic.

Led by Rep. Danny Davis (D-Ill.), the group wants any future coronavirus legislation to include an extension of the temporary Troubled Debt Restructuring and the National Credit Union Administration’s Central Liquidity Facility provisions that were included in coronavirus economic stimulus legislation earlier this year.

Both provisions are scheduled to expire at the end of the year and the House members want them extended to the end of next year.

While most members signing the letter were Democrats, the group includes Rep. Don Young (R-Alaska).

The letter said that the Troubled Debt Restructuring is a concession by a bank or credit union to a borrower that it generally would not consider under normal circumstances. Accounting rules require the lender to reflect in financial records any possible losses from extending a TDR concession.

The coronavirus legislation requires banks and credit union regulators to allow lenders the opportunity to suspend the accounting requirements under certain circumstances.

“The issue banks and credit unions face is that the TDR exemption lasts only until the end of 2020, but most forbearances [offered to borrowers] will not end until 2021, at which time financial institutions will need to modify these loans,” the members said.

They added that the “unintentional misalignment” will make it more difficult for borrowers to obtain loan modifications.

In the letter, the members also request that any future stimulus bill extend provisions dealing with the Central Liquidity Facility. Previous stimulus legislation extended the CLF’s borrowing authority from 12 times its capital to 16 times its capital.

The House members said that before that provision was enacted, the NCUA had to engage in a membership campaign for the CLF—urging credit unions to contribute capital to the facility at a time when they could least afford it.

The CLF expansion also is set to expire at the end of the year.

Credit union trade groups also have asked for an extension of the TDR and CLF provisions.

It remains unclear Wednesday whether any new stimulus legislation can be passed before Election Day. House Speaker Nancy Pelosi (D-Calif.) has been negotiating with Treasury Secretary Steven Mnuchin for several weeks over possible provisions that might be contained in that bill. However, Senate Majority Leader Mitch McConnell (R-Ky.) has been dismissive of that effort.

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