#2020-43, December 18, 2020

Negotiations Continue on the Economic Stimulus Package

This week, Congress continued to work on a stimulus package in Congress this week. The Senate released a draft of the 908 Coalition bill, a $908 billion bipartisan Coronavirus relief package which contains $300 billion for another round of Paycheck Protection Program (PPP) lending.  The draft bill also includes several enhancements to the program such as a streamlined forgiveness application for smaller loans; hold harmless language for PPP lenders; and clarifications on agent fees, the deductibility of Economic Injury Disaster Loan advances from PPP loan forgiveness and the tax-deductibility of business expenses paid for with PPP loan proceeds.

As mentioned in last week’s bulletin, the MBA and other associations continue to advocate for an extension of the CARES Act provisions such as the treatment of troubled debt restructuring and CECL delay.  In addition, the package is expected to contain another round of economic stimulus checks and we are hopeful that language will also be included to clarify that these checks are not subject to garnishment.

Negotiations on the bill will likely continue over the weekend with the hope of voting on a package early next week.

Defense Authorization Bill with BSA/AML Provisions Approved by the Senate

As anticipated, the Senate passed the NDAA by a bipartisan vote of 84 to 13. It includes MBA-supported provisions to streamline BSA/AML compliance. The bill directs the Financial Crimes Enforcement Network (FinCEN) to:

• establish and maintain a national registry of beneficial ownership information
• promote information sharing and coordination,
• modernize the system and encourage technological innovation 

It also revises the Bank Secrecy Act (BSA) with the following changes:

• When regulators prescribe AML standards, they must emphasize the importance of the risk-based approach, especially higher risks;
• Requires Treasury to establish AML priorities, updated every four years and considers updating priorities every two years);
• Priorities must be coordinated with the National AML Strategy required by the Countering America’s Adversaries Through Sanctions Act (CAATSA);
• Regulations on priorities are required within 180 days of enactment and must become part of the examination process and;
• FinCEN must regularly communicate about the priorities and provide feedback to financial institutions.

MBA and other banking trade groups advocated for these measures to streamline and simplify BSA/AML compliance for banks while continuing to provide law enforcement with the tools and information  to identify and prevent illicit activity such as money laundering, fraud, human trafficking, drug smuggling, and terrorism financing.

The bill has been sent to President Trump for his signature.  While he has threatened to veto the measure over other provisions, the House and Senate vote margins were large enough to override a presidential veto.

olarWinds Reports Significant Cyber Attack

Last weekend, SolarWinds, a security vendor that serves a wide range of military, private companies, government agencies, and academic institutions, reported that it was the target of a massive cyber attack that may have allowed hackers to gain access to the emails, systems and data of several of its clients, including the Treasury and Commerce Departments.  According to published reports, it is suspected that Russian hackers targeted SolarWinds’ Orion business software with a “supply chain attack,” through which malicious code was embedded within a routine software update that was then distributed to the firm’s clients.

After the reports became public, the Cybersecurity and Infrastructure Security Agency (CISA) issued an emergency directive noting that the breach “poses an unacceptable risk” and directing federal agencies to take steps to disconnect or shut down use of affected SolarWinds Orion products.  The company issued a security advisory to its users with additional information and more detailed instructions.

To read the CISA directive, click here.  To read the SolarWinds advisory, click here.

NCUA Finalizes MBA-Opposed Rule on Credit Union Subordinated Debt

This week, the National Credit Union Administration (NCUA) issued a final rule allowing large credit unions to issue subordinated debt for regulatory capital purposes.  The Association strongly opposed the proposed rule in a comment letter filed earlier this year. 

According to the final rule, credit unions can issue subordinated debt that could be purchased by outside investors, including the corporate debt markets, which retaining their tax-exempt status.   MBA’s comment letter asked the NCUA to withdraw the proposal given a number of legal and policy concerns about the ability of tax-exempt credit unions to sell this debt to for-profit investors.  In addition, the Association questioned whether the sale of subordinated debt threatens both credit union safety and soundness and their continued tax-exempt status. 

To read more, click here.  To read MBA’s comment letter, click here.

EEOC Releases Vaccination Guidance for Employers; MBA to Host Webinar in January

Earlier this week, the Equal Employment Opportunity Commission (EEOC) issued a revised question-and-answer document that confirms that employers may mandate COVID-19 vaccinations when they are available.  The Q&A document also addresses questions about how employers should respond to requests by employees not to be vaccinated because of health or religious reasons.

According to the EEOC guidance, if an employee indicates that he or she is unable to receive a COVID-19 vaccination because of a disability, the employer should conduct an individualized assessment to determine if the employee would pose a “direct threat” to the health or safety of others in the workplace because the unvaccinated employee will expose others to the virus at the worksite.

If an employer determines that the employee poses a direct threat, the employer cannot exclude the employee from the workplace—or take any other action—unless there is no way to provide a reasonable accommodation, absent undue hardship.

MBA Associate Member Nutter McClennen and Fish LLP recently issued a Legal Advisory that provides an analysis of the EEOC guidance.  The Association is also planning to host a complimentary webinar in the coming weeks that will provide an opportunity for member bankers to ask specific questions regarding vaccine mandates.  We encourage you to discuss the guidance with your legal counsel as you develop bank policies about COVID-19 vaccinations.

To read the EEOC guidance, click here.  To read the Nutter Legal Advisory, click here.

Regulators Update Asset-Size Thresholds for CRA

The financial regulatory agencies this week released the updated asset-size thresholds that will differentiate small and intermediate banks and savings associations under the Community Reinvestment Act (CRA).  As of January 1, 2021, a “small bank” or “small savings association” will be defined as having had assets of less than $1.322 billion in the previous two calendar years.  An “intermediate small bank” or “intermediate small savings association” is defined as having assets of at least $330 million and less than $1.322 billion during the same two-year time period.

To read more, click here.