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Sen. Crapo calls for extensions and expansions of COVID-19 relief efforts

Written by Jasir Jawaid

Chairman of the U.S. Senate Committee on Banking Mike Crapo urged regulators to extend the current expected credit loss standard to Jan. 1, 2023, while clarifying and minimizing unintended effects of mid-year adoption.

He made the recommendation in a July 31 letter to the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the National Credit Union Administration, the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency.

Crapo, R-Idaho, also said community bank leverage ratio relief should be extended to Dec. 31, 2021, and troubled debt restructuring, or TDR, relief should be extended to Jan. 1, 2022.

"Although it is outside of the purview of the federal prudential regulators, it would also be prudent to extend relief related to TDRs and CECL to insurers and nonbanks that engaged in similar activities to banks and credit unions that are equally affected by these policies during this difficult time," Crapo said in the letter.

He also recommended an extension of HUD's and the FHFA's respective single-family foreclosure and eviction moratoriums as well as an extension by FHFA of the maximum duration of multifamily mortgage forbearance for loans backed by Fannie Mae and Freddie Mac, beyond the current six-month period.

In a separate letter to the Fed and the Treasury Department, Crapo called for the expansion of the Main Street Lending Program, or MSLP, by setting up an asset-based lending program and commercial real estate program. Crapo argued that the establishment of a facility accommodating asset-based lending could increase access for several industries that could not otherwise use the MSLP based on earnings or cash flow metrics.

He also noted the importance of addressing the unique adverse circumstances the commercial real estate sector is facing via the MSLP or a separate facility.

"Several options have been circulated and should be carefully considered in crafting the appropriate terms," Crapo said.

The regulators have hinted that they are open to the idea of an asset-based lending facility for companies that do not meet the MSLP's eligibility criteria.

This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.


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