COVID-19 policies should protect consumers, financial institutions
Congress should implement COVID-19 policies that protect both consumers and financial institutions, CUNA wrote to a House Financial Services subcommittee Thursday. The Subcommittee on Consumer Protection and Financial Institutions held a hearing Thursday on policy options to help consumers during the pandemic.
“As Congress considers further policy options related to the public health and economic crisis we urge you to avoid implementing certain well-intentioned protections such as suspension of negative credit reporting, a debt collection moratorium, and extended forbearance periods that, could put the safety and soundness of all financial institutions at risk while providing little help to consumers,” the letter reads.
CUNA has concerns over:
- Legislation that would prohibit the collection of debt related to past due consumer and small business loans or expand the scope of the Fair Debt Collection Practices Act (FDCPA);
- Legislation that would affect credit reporting during the pandemic, including suspending most negative credit reporting and requiring adverse information be excluded from consumer credit reports; and
- The impact the large volume of mortgage forbearances will have on the liquidity of mortgage servicers.
CUNA also said further Congressional action is needed to:
- At least temporarily remove the member business lending cap for emergency-related loans. CUNA estimates this would free up more than $5 billion in capital, creating nearly 50,000 jobs at no cost to the federal government. CUNA supports such a bill from Reps. Brad Sherman (D-Calif.) and Brian Fitzpatrick (R-Pa.);
- Provide temporary flexibility to NCUA to offer forbearance from Prompt Corrective Action requirements; and
- Increase the arbitrary credit union loan maturity limit.