CUNA Chief Advocacy Officer Ryan Donovan detailed credit unions’ push for extended pandemic relief in a recent interview with Reuters. Multiple relief provisions enacted as part of the CARES Act are set to expire Dec. 31, and CUNA and Leagues are engaging with Congress to include extensions in funding and relief bills currently being negotiated.
One piece of relief gives lenders more flexibility under Troubled Debt Restructuring (TDR), which Donovan says would ultimately impact borrowers.
“This provision has given credit unions and banks some assurance that if they work with borrowers that are having financial difficulty as a result of the pandemic, that they can work with those borrowers and not have supervisory scrutiny,” Donovan said. “That’s going to go away.”
Loans classified as TDRs are penalized by regulations and attract additional scrutiny from examiners. While some regulators, including the Federal Deposit Insurance Corporation Chairman Jelena McWilliams, have said regulators will work together on the topic mentioned, but did not elaborate.
Donovan noted that lenders are wary of informal reassurances after being punished by examiners and investors for accumulating TDRs during the recession last decade.
CUNA is also seeking extension of expanded borrowing from NCUA’s Central Liquidity Facility, Paycheck Protection Program (PPP) forgiveness, PPP lender liability protection and other provisions in the legislation currently being negotiated.