The Federal Reserve Board of Governors’ work has boosted confidence in the financial system in the wake of the COVID-19 pandemic, CUNA wrote to the Senate Banking Committee Tuesday. The committee heard semi-annual testimony from Federal Reserve Board Chairman Jerome Powell Tuesday.

“The unprecedented shutdown of the American and world economies has led to economic uncertainty for individuals and businesses of all types. Changes to regulations and the creation of new lending programs by the Board to provide loans to businesses will help individuals and business weather the storm… For credit unions these changes have helped to keep member loan demand fairly steady and mortgage pipelines in particular have been near capacity,” the letter reads. “Near-record numbers of members have refinanced into lower-rate mortgages and effectively freed up cashflow to meet daily needs and build precautionary savings.”

CUNA also offered comments on several recent Fed actions, including:

• Fully supporting the March 15 decision to reduce reserve requirement ratios of transaction accounts, as well as the April 24 interim final rule deleting the six-account-transfer-per-month limit;
• Recognizing the quick creation of the Paycheck Protection Program Liquidity Facility to provide liquidity to eligible financial institutions making PPP loans;
• Launching and making needed changes to the Main Street Lending Program, which supports lending to small and medium-sized businesses that were in sound financial condition before the onset of the pandemic. The changes were made to make small businesses eligible to borrow through the program, and include:
  • Lowering the minimum loan size for certain loans to $250,000 from $500,000;
  • Increasing the term of each loan option to five years, from four years;
  • Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and
  • Raising the Federal Reserve Bank's participation to 95% for all loans.