By Rebeca Romero Rainey
President & CEO
Dear Majority Leader McConnell, Minority Leader Schumer, Speaker Pelosi, and Minority Leader McCarthy:
On behalf of community banks across the country, with more than 52,000 locations, I write to urge swift passage of comprehensive legislation to avoid the painful economic fallout of the ongoing pandemic.
As lawmakers return to Washington and the 116th Congress comes rapidly to a close, the nation’s families and small businesses are counting on Congress to pass the critical relief they need to sustain businesses, paychecks, and livelihoods. We urge you to work expeditiously.
This comprehensive legislation should include solutions developed by community bankers from across the country, drawing on their unique insight into local economic conditions.
Community bankers know what works best to support small businesses and jobs in the rural, suburban, and urban communities they serve. Please consider the following recommendations which are summarized here and explained in more detail in the attachment to this letter.
Reforms to Paycheck Protection Program
- Simplified forms and procedures for Paycheck Protection Program loan forgiveness including a presumption of compliance for all loans with an original balance of $150,000 or less (S. 4117, Cramer and Menendez and H.R. 7777, Houlahan and Upton) and an online PPP loan forgiveness calculator (S. 4171, King and H.R. 7413, Wagner and Clay).
- SBA purchase of PPP loans at par (after netting forgiveness amount).
- Preserve business expense deduction for PPP borrowers (S. 3612, Cornyn and H.R. 6821, Holding).
- Exclude PPP loans from regulatory asset threshold calculations.
Bank Capital and Accounting Relief
- Extend Troubled Debt Restructuring (TDR) provisions of the CARES Act through December 31, 2021 and suspend impairments of COVID-19-related assets for a period of two years.
- Allow banks to amortize COVID-19-related loan losses over a 7- or 12-year period depending on the type of collateral backing the loan.
- Ensure that the origination and/or holding of PPP loans would have no impact on a community bank’s risk-based capital and leverage ratios.
- Suspend FASB’s Current Expected Credit Losses (CECL) implementation until 2025.
- Make 8% Community Bank Leverage Ratio (CBLR) permanent for institutions of $10 billion or less in assets.
- Create liability safe harbor for businesses from COVID-19-related suits.
- Expand employee retention tax credit as provided for by the Jobs Credit Act of 2020 (H.R. 6776, Murphy).
- Preserve net operating loss provisions of the CARES Act.
- Extend the government sponsored enterprises’ qualified mortgage patch to January 2022. Extending the patch would help avoid additional disruption as the economy and housing market recover from the current crisis.
- Provide aid to state and local Housing Finance Agencies for helping borrowers with mortgage payments, forbearance, and loan modifications.
- Establish a liquidity facility for all mortgage servicers.
Support for Local Regions
- Raise current bank-qualified municipal bond annual issuance limit to $50 million from $10 million to expedite low-cost funding for local projects.
Support Agricultural Lending
- Allow interest on loans secured by agricultural real estate or primary residences in rural communities to be tax-exempt as provided for in the Enhancing Credit Opportunities in Rural America (ECORA Act, S. 1641, Roberts and H.R. 1872, Watkins).
Financial Assistance to the Farm Sector
- Provide additional direct financial assistance to farmers, ranchers and others involved in the food sector.
Enhance USDA Guaranteed Lending Programs
- Increase funding for USDA direct and guaranteed loan programs.
- Increase loan limits for USDA guaranteed farm loans to $2.5 million to assist a broader segment of family farmers and ranchers.
- Allow the Farm Services Agency to reimburse borrowers for guaranteed loan fees through 2021.
- Temporarily suspend term limits on FSA direct operating loans through 2021.
- Provide lenders and borrowers the choice of which county office to access for approval of guaranteed loan applications to speed up loan application approvals and reduce backlogs.
Forbearance for Banks and Bank Customers.
- Ensure regulators do not classify agricultural loans as substandard.
- Allow additional time for borrowers to work out farm loan repayments.
Thank you for your consideration. We look forward to continuing to work with you to sustain the American economy as this crisis evolves.
Rebeca Romero Rainey
President & CEO
Treasury Secretary Steven Mnuchin
Small Business Administration Administrator Jovita Carranza
Members of the U.S. House of Representatives
Members of the United States Senate