March 19, 2021  

Bankers Eligible For COVID Vaccine

Gov. Mike Parson announced Thursday that Missouri will activate Phase 2 of the state’s COVID-19 vaccination plan beginning Monday, March 29. Phase 2 includes employees within the financial services sector. Activation of Phase 2 is estimated to extend vaccine eligibility to approximately 880,000 Missourians.

In addition, Phase 3 of the state’s vaccination plan begins Friday, April 9. Phase 3 will be open to all Missouri adults, extending vaccine eligibility to an estimated 1.1 million Missourians who were not activated under any other tier or phase.

A complete list of populations included in each phase, as well as activation status, is available online.

House Clears PPP Extension Bill

By a 415-13 vote Tuesday night, the U.S. House passed legislation that would extend the Small Business Administration’s Paycheck Protection Program application deadline from March 31 to May 31. Missouri Rep. Blaine Luetkemeyer and Rep. Nydia Velasquez, D-N.Y., introduced the bipartisan bill — H.R. 1799, the Paycheck Protection Program (PPP) Extension Act of 2021. The measure also would give SBA an additional 30 days to process loan applications received by the new deadline before the program ends June 30. The measure is 

A companion bill has also been introduced in the Senate by Sens. Ben Cardin, D-Md., Jeanne Shaheen, D-N.H., and Susan Collins, R-Maine.

The American Bankers Association and a coalition of other trade groups have called on Congress to extend the application period for the program and offered support for the PPP Extension Act of 2021.

ABA Urges Lawmakers To Advance SAFE Banking Act

In a letter to several members of the House Financial Services Committee, the American Bankers Association expressed support for the SAFE Banking Act of 2021, which would provide a safe harbor for depository institutions seeking to serve legitimate cannabis-related businesses in states where such activity is legal.

The bill, which was passed by the House in the last Congress but was not taken up in the Senate, was expected to be reintroduced in the House this week.

Currently, 36 states have legalized cannabis for medical or adult use, but current federal law prevents banks from safely banking cannabis businesses, including ancillary businesses that provide them with goods and services. 

“Our member banks find themselves in a difficult situation due to the conflict between state and federal law, with local communities encouraging them to bank cannabis businesses and federal law prohibiting it,” the association said. “Congress must act to resolve this conflict between state and federal law.”

GOP Senators Caution Fed On Climate Risk Regulations For Banks

A group of Republican senators cautioned Federal Reserve Chairman Jerome Powell that using financial regulation and supervision to advance environmental policy objectives “would be beyond the scope of the Federal Reserve’s mission” and urged against taking additional actions with regard to climate-related risks. The lawmakers pointed out in their letter that “banks are in the best position to assess and price for risks in their portfolios” and that they are already monitoring and pricing in climate-related risks.

“Simply put, financial regulation does not and should not seek to guard against every type of unforeseen event; rather, it should ensure that financial institutions are resilient and have the capability to withstand unique economic and financial market stresses as they arise,” the lawmakers wrote. “As you continue to analyze the potential implications of climate change for financial institutions and markets, we urge you to remain mindful of both the inherent challenges of modeling severe weather events and the limits of the Federal Reserve’s statutory authority in this area.”

House Lawmakers Reintroduce Bill To Level Playing Field Between Banks, FCS

Reps. Ron Kind, D-Wis., and Randy Feenstra, R-Iowa, introduced legislation that would end the taxation of interest earned from agricultural real estate loans. The Enhancing Credit Opportunities in Rural America Act (H.R. 1977) would not only reduce servicing costs for community banks providing these types of loans, it also would also level the playing field between banks and the tax-advantaged Farm Credit System, making it easier for banks to support the farm sector through real estate loans. ECORA was introduced previously during the 116th Congress.

Consumers Report High Satisfaction With Banks, Industry Response To COVID-19

One year into the COVID-19 pandemic, the vast majority of Americans say they are happy with their bank, according to results from a new American Bankers Association/Morning Consult poll. The survey found that nine in 10 Americans with a bank account were “very satisfied” or “satisfied” with their primary bank while 96% rated their bank’s customer service as “excellent,” “good” or “very good.”

The survey also found that Americans highly regarded banks’ response to the pandemic, with three in four U.S. adults saying they approved of how their bank responded to COVID-19.

More than one-third of U.S. adults — 34% — were aware of assistance programs offered by their bank for customers facing financial hardship, and 72% who were aware of their bank’s assistance options during the pandemic now have a more favorable opinion of their financial institution, according to the survey. An overwhelming majority — 84% — agreed that banks are important to the nation’s economy.

The survey also asked consumers about the Small Business Administration’s Paycheck Protection Program. Four in 10 respondents who work at a small business said their company received a PPP loan, and 92% of them said it made a difference, with 59% saying it made a major difference. Nine in 10 of these respondents said the PPP loan helped to preserve jobs at that business.

FDIC Report Highlights Continued Strength Of Farm Banks

Farm banks have held up well despite challenges to the agriculture industry since 2014, and problem loan levels have remained modest, according to a new report from the Federal Deposit Insurance Corporation. 

Cautious real estate lending during a boom in farmland values has given farm banks the flexibility to work with financially stressed borrowers by tapping into their farmland equity, according a new report published in the FDIC Quarterly.

Net farm income for 2020 is expected to increase 46% to $121.1 billion, due in part to record levels of government assistance and a rebound in commodity prices, the report said, but “absent a sustained improvement in agricultural conditions, stress is likely to continue for some farmers and their lenders.” Meanwhile, “early forecasts suggest 2021 will not be as strong as 2020, but will still be above long-term average,” the FDIC said.

The paper also looks at weaknesses in the ag sector from 2014 through 2019, the effects of agricultural issues on farm bank condition during the downturn and potential challenges ahead, such as highly leveraged farmers.

Fed Maintains Interest Rates Near Zero

The Federal Reserve will continue to keep its target range for the federal funds rate at zero to 0.25% as the COVID-19 pandemic continues, causing “tremendous human and economic hardship across the United States and around the world,” the Federal Open Market Committee said.

The committee said it will maintain that range of the federal funds rate until inflation has risen to 2% and is on track to moderately exceed 2% percent for some time. The FOMC added that ongoing public health crisis continues to weigh on economic activity, employment and inflation and poses considerable risks to the economic outlook.

In a press conference after the release of the FOMC statement, Fed Chairman Jerome Powell said that “employment is 9.5 million below its pre-pandemic level. The unemployment rate remains elevated at 6.2% in February. This figure understates the shortfall in employment, particularly as participation in the labor market remains notably below pre-pandemic levels.”

FDIC Urges Participation In Diversity Policies Self-Assessment

The Federal Deposit Insurance Corporation’s Office of Minority and Women Inclusion is encouraging all financial institutions regulated by the agency with 100 or more employees to submit voluntary self-assessments of their diversity policies and practices.

Submissions for the financial institution diversity self-assessment are open until June 30. The assessment seeks information on organizational commitment to diversity and inclusion, workforce profile and employment practices, procurement and business practices/supplier diversity, as well as practices that promote transparency of organizational diversity and inclusion.

The assessment is not an examination requirement and results have no effect on an institution’s safety and soundness, consumer compliance, or CRA examination ratings, according to the FDIC. 

CFPB Rescinds 2020 Policy Statement On ‘Abusive’ Practices Under UDAAP

The Consumer Financial Protection Bureau rescinded a January 2020 policy statement that clarified the bureau’s approach to citing and challenging “abusive” conduct in supervision or enforcement actions.

In the now-rescinded statement, the CFPB had said that it would consider whether the harm to consumers outweighs the benefit to consumers and that it would generally avoid “dual pleading” both abusiveness and unfairness or deception violations that stem from the same or nearly all of the same facts. In addition, the CFPB had said it would generally not seek monetary relief for abusive violations in instances where there is a good-faith effort to comply with the abusiveness standard, except to address consumer injuries caused by the conduct.

Going forward, the CFPB said it “intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress.”

Banking Agencies Request Public Comment On Private Flood Insurance Guidance

The banking agencies requested public comment on 24 proposed interagency questions and answers about private flood insurance. The new Q&As cover both mandatory and discretionary acceptance of private flood insurance for loans subject to the mandatory purchase requirement, as well as general flood compliance guidance. The agencies noted that the proposed Q&As are intended to help lenders comply with the private flood insurance provision of the Biggert-Waters Flood Insurance Reform Act of 2012.

Comments on the proposed additions to the interagency Q&As are due 60 days after they are published in the Federal Register.

FHFA Extends Loan Processing Flexibilities For GSEs

The Federal Housing Finance Agency said it would extend until April 30 certain previously announced loan processing flexibilities. These flexibilities, which were set to expire at the end of this month, include allowing alternative appraisals on purchase and rate term refinance loans, alternative methods for documenting income and verifying employment before loan closing and expanding the use of power of attorney and remote online notarizations to assist with loan closings.

Some temporary flexibilities, including employment verification, condominium project reviews, and expanded power of attorney, are expected by FHFA to be retired April 30. 

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