Banking

Week ahead: Credit unions set for year-end legislative victory

Credit unions appear set to close out the 2020 legislative session with a victory.

Congress on Monday was expected to finalize a coronavirus-relief package that includes several of the priorities industry groups have spent much of the year lobbying for. Chief among them is extension of expanded borrowing powers for the National Credit Union Administration’s Central Liquidity Facility, which are scheduled to expire on Dec. 31, as well as more than $280 billion for a reauthorization of the Paycheck Protection Program, along with a simplified loan-forgiveness process.

Perhaps most impactful to credit unions, however, is the $600 in direct assistance payments for many Americans and an additional $300 per week in expanded unemployment benefits that will run until early March. Those funds could help consumers stay current on loan payments or even possibly be comfortable taking out new loans at a time when credit union lending is slowing and institutions under $1 billion – which constitute the vast majority of the industry – are struggling with slowing membership and declining loan growth. One plus, however, is that despite those challenges the industry’s delinquency rate remains low and continues to decline year-over-year.

The bill also includes $25 billion in rental assistance and $12 million in funding for community development financial instituions and minority depository institutions, the bulk of which is earmarked for long-term capital investments and grants and technology assistance.

Along with the COVID-relief measures, Congress has also agreed to a $1.4 trillion government spending package. There is a possibility those items could be rolled together.

Text of the COVID package was expected to be released by midday Monday, with the House debating the issue during the day before the Senate takes up the matter. Because of procedural factors that could make House consideration slower, the Senate may not come into play until late Monday or even Tuesday. Ryan Donovan, chief advocacy officer at the Credit Union National Association, noted that the Senate has some tools the House doesn’t that would enable it to expedite the process.

“In some respects there may be a path to getting this done [on Dec. 21] but if it slips into tomorrow or Wednesday, that might not be that surprising,” he said.

Despite those successes, the House and Senate are also shaping up for a potential fight with President Trump.

Both chambers overwhelmingly passed the latest version of the National Defense Authorization Act – which includes a provision that bars banks from the same access to military installations that credit unions have – but the president has threatened to veto the bill. If he does, the House could return to Washington in the week after Christmas to override that veto, with the Senate expected to take similar action on the morning of Jan. 3 before the next Congress is sworn in.

Lastly, the bulk of the National Credit Union Administration’s major business has concluded for the year, but the agency closed out 2020 with a marathon session last week, including back-to-back board meetings covering nine different items, among them a vote on the agency’s controversial budget plan.

Board member Kyle Hauptman, who was sworn in at the agency early last week, was appointed vice chairman on Friday, though it’s unclear if he will keep that title, should President-elect Joe Biden elevate board member Todd Harper to the chairmanship.


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