March 09, 2020

Cortez Masto, Banking Democrats Urge Regulators to Provide Guidance to Financial Institutions About Forbearance Due to Coronavirus Impacts

Washington, D.C. – U.S. Senator Catherine Cortez Masto (D-Nev.) joined Senator Mark Warner (D-Va.) and several members of the Senate Banking Committee in a pair of letters to financial regulators and trade groups urging our nation’s financial sector to prepare for the likely impacts of the coronavirus and take steps to protect consumers who may suffer financially as a result of a coronavirus outbreak. 

In a letter to leaders of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), and Conference of State Bank Supervisors (CSBS), the senators called on the regulators to provide financial institutions with guidance to help assist individuals and communities affected by coronavirus.

“As Americans seek to comply with CDC guidance and protect the well-being of their families, many consumers may face negative shocks to household finances, including challenges with paying their day-to-day bills, credit cards, student loans, small business loans and mortgage payments, among other financial obligations. Accordingly, we urge you to issue guidance to financial institutions encouraging them to work with consumers and businesses affected by the virus and to recognize that they may have difficulty accessing affordable credit and face temporary hardship in making payments on their credit obligations. This guidance should encourage financial institutions to make efforts to modify terms on existing loans or extend new consumer-friendly access to credit to help consumers and businesses affected by the virus, consistent with safe-and-sound lending practices. The guidance should also encourage financial institutions to take steps to prevent adverse information from being reported to the credit bureaus and utilized in any manner that harms consumers affected by the virus. We look forward to hearing swiftly from you about what steps you will take to provide regulatory clarity for financial institutions seeking to assist customers during this challenging time,” wrote the senators.

Full text of the letter to financial regulators is available here.

In a separate letter, the senators urged trade associations representing the nation’s bankers and credit unions to work with their members to prioritize their employees’ health and safety in the event of coronavirus outbreak, and to offer flexibility and forbearance to customers whose finances may be negatively impacted as a result of following recommended Centers for Disease Control and Prevention (CDC) guidance to limit exposure and spread of the virus.

“We encourage your member institutions to commit to ensure that any employees or contractors who follow novel coronavirus-related guidance from public health authorities can count on basic protections like preservation of their employment status and basic financial forbearance,” wrote the senators.  

Added the senators in the letter, copies of which were sent to the Consumer Bankers Association, Bank Policy Institute, American Bankers Association, Financial Services Forum, Credit Union National Association, National Association of Federally-Insured Credit Unions, and Independent Community Bankers of America, “Further, we urge you to work with your customers to ensure they are not financially penalized as they seek to comply with CDC guidance and protect the safety and wellbeing of their families. Many of your customers may face shocks to household finances, including challenges with paying their day-to-day bills, credit cards, small business loans and mortgage payments, among other financial obligations. Accordingly, we urge you to consider waiving overdraft and monthly service fees for affected customers, suspending or modifying student loan, mortgage and business loan payments as necessary, providing affordable, short-term credit, and encouraging customers to contact your institution’s special care line so that you may work with them individually to help them avoid the negative consequences of this unique health emergency.”

Full text of the letter to bankers is available here.