The work of the Federal Reserve Board of Governors has boosted confidence in the financial system in the wake of the COVID-19 pandemic, CUNA wrote to the Senate Banking Committee on Tuesday. The committee heard biannual testimony from Federal Reserve Chairman Jerome Powell on Tuesday.

“The unprecedented shutdown of the US and global economies has led to economic uncertainty for individuals and businesses of all types. Regulatory changes and the creation of new loan programs by the board of directors to provide business loans will help individuals and businesses weather the storm … For credit unions, these changes have helped keep the business going. Fairly stable member loan demand and mortgage pipelines in particular are nearing capacity. », We read in the letter. “A near-record number of members have refinanced themselves into lower rate mortgages and have effectively freed up cash to meet daily needs and build precautionary savings. “

CUNA also commented on several recent Fed actions, including:

  • Fully supporting the decision of March 15 to reduce the reserve requirement ratios of transaction accounts, as well as the Provisional final regulations of April 24 the removal of the limit of six transfers per month;
  • Recognizing the early establishment of the Paycheck Protection Program Liquidity Facility to provide liquidity to eligible financial institutions providing PPP loans;
  • Initiate and make necessary changes to the Main Street Loan Program, which supports loans to small and medium-sized businesses that were financially healthy before the start of the pandemic. The changes were made to make small businesses eligible to borrow under the program, and include:
    • Lower the minimum loan amount for some loans from $ 500,000 to $ 250,000;
    • Increase the duration of each loan option to five years, instead of four years;
    • Extend the repayment period of all loans by delaying principal payments by two years instead of one; and
    • Increase Federal Reserve Bank participation to 95% on all loans.

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