WASHINGTON, D.C.— House Republican Whip Steve Scalise (R-La.) released the following statement upon news that the agreement between the Trump Administration, Senate Republicans, and Senate Democrats on the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in the Senate last night, includes language enabling loan forbearance:
“American workers and businesses need smart, proven relief measures during this crisis. Loan forbearance was a critical tool that helped small businesses and homeowners in southern Louisiana survive the devastation and financial uncertainty of Hurricane Katrina. Just as loan forbearance was a critical lifeline to local businesses in the aftermath of Katrina, this financial tool can once again help keep many businesses afloat, and I have worked closely with the FDIC Chair, House and Senate leadership, and committee chairs to ensure that the latest coronavirus relief legislation includes language enabling the proven tool of loan forbearance. Today, I am proud to announce that we secured these provisions in the CARES Act agreement that passed the Senate yesterday.
“I hope that all of America will soon be able to take southern Louisiana’s lead and benefit from our experience fighting man-made and natural disasters. We cannot let a public health crisis spiral into a sustained financial crisis for American families.”
Robert Taylor, CEO of the Louisiana Bankers Association, also gave the following statement:
“Louisiana bankers are ready to implement the provisions in the legislation as quickly as possible to get money flowing to businesses and their employees. We applaud Congressman Scalise and his able staff, and all the Louisiana delegation, for focusing their energies on people and in seeking to help businesses be able to get back to full strength quickly.”
The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes the following sections relating to loan forbearance:
Section 4013. Temporary Relief from Troubled Debt Restructurings.
- Allows banks to provide forbearance for small business loans without having to suffer the punitive regulations that accompany the reporting of a Troubled Debt Restructuring.
- A financial institution may elect to suspend requirements under U.S. Generally Accepted Accounting Principles for loan modifications related to the coronavirus pandemic, and suspend any such determination regarding loans modified as a result of the effects of the coronavirus. Federal banking agencies and the NCUA must defer to a financial institution to make a suspension. Such election may begin on March 1, 2020 and last no later than 60 days after the lifting of the coronavirus national health emergency.
Section 4008. Debt Guarantee Authority.
- Guarantees full deposit insurance coverage which gives banks flexibility to provide forbearance and meet small business lending needs.
- Authorizes the Federal Deposit Insurance Corporation (FDIC) to temporarily establish a debt guarantee program to guarantee debt of solvent insured depositories and depository institution holding companies. Noninterest-bearing transaction accounts may be treated as a debt guarantee program. The National Credit Union Administration (NCUA) is given authority to temporarily increase share insurance coverage for noninterest-bearing transaction accounts. Such authorities, programs, guarantees, and increases shall terminate no later than December 31, 2020.