GOP leaders suggest leniency for PPP lenders
- Republican senators have called for lenders with higher assets due to P3 loans to be exempt from further regulation.
- The easing of bank supervision indicates that regulators want to secure their support for ongoing stimulus efforts.
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Republican senators have asked regulators to exempt banks participating in federal coronavirus relief programs from further regulatory scrutiny, American Banker reports.
Specifically, lawmakers want to ensure that small banks and
whose total assets may have swelled as a result of the granting of Paycheck Protection Program (PPP) loans do not face higher regulatory burdens such as those that apply to financial institutions ( IF) with more than $ 10 billion in assets under the Dodd-Frank Act. The concerns were received with kindness by the vice-president of the
Randal Quarles and Acting Currency Controller Brian Brooks.
The receptiveness of financial regulators to the proposals reflects their tendency to cut red tape for banks and businesses struggling with the coronavirus pandemic. Last week, the Consumer Financial Protection Bureau (CFPB) Posted a no-action letter to Bank of America for its new small dollar loan offer, meaning the bank is unlikely to see any supervisory or enforcement action from the bureau for the offer .
It should be noted that the program aligns with a May recommendation from regulators that banks should offer low-value loans as an alternative to often predatory payday lenders. In addition, the Small Business Administration (SBA) and the Department of the Treasury published a simpler request to cancel PPP loans under $ 50,000. These measures essentially reward the FIs for stepping up their efforts to facilitate recovery efforts.
Regulators and lawmakers are likely looking to remove potential obstacles that could deter FIs from future relief efforts as the pandemic continues. Additional stimulus seem increasingly needed as coronavirus cases to skyrocket across the United States. If FIs fear that additional relief loans through government programs could create an unmanageable regulatory burden, they may refuse to participate, making it harder for consumers to access much-needed funds.
While we wait that the election of Joseph R. Biden Jr. as chairman will result in leadership changes for some financial regulators like the CFPB – and steer those entities toward greater long-term oversight – streamlining regulation will benefit short-term relief efforts as the country works to minimize the economic fallout from the pandemic.
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