In a letter to the Federal Reserve Board and the Treasury Department today, Senate Banking Chairman Mike Crapo (R-Idaho) raised a number of outstanding issues with recently announced initiatives to bolster the economy in response to the coronavirus pandemic.
Crapo’s letter addressed the following areas:
- SBA Paycheck Protection Program. Crapo urged guidance on participation in the PPP by lenders that are not currently approved; flexibility for businesses in currently ineligible industries to access the PPP; clear communication regarding the secondary market for PPP loans, guidance on loan forgiveness, and a comprehensive hold harmless agreement; and an acknowledgement of the good faith effort by banks to roll out the program without full guidance.
- Paycheck Protection Program Liquidity Facility. Crapo noted that the facility must be widely accessible, including to a variety of non-depository institutions.
- Main Street Lending Program. To ensure broad participation in the program, Crapo urged resolution of issues related to earnings before interest, taxes, depreciation and amortization (EBITDA). He also called for flexibility for institutions to use a rate other than the Secured Overnight Financing Rate; clarity that the underwriting and lending decisions ultimately lie with the bank; and permission for U.S. branches and agencies of non-U.S. banks to act as intermediaries for their customers.
- Corporate credit and asset-backed securities. Noting that additional steps will be needed to stabilize credit markets, he urged the Fed and Treasury to seek input on how to expand the Primary Market Credit Facility, Secondary Market Corporate Credit Facility, and Term Asset-Backed Securities Loan Facilities.
- The Fed’s Municipal Liquidity Facility. Crapo called for updates to the program that would include cities, counties and tribes in rural states and provide greater clarity on pricing.
“Given the state of the economy and employment as a result of working to stop the spread of COVID-19, it is important that the Treasury and Federal Reserve get these facilities operational and lending to the real economy in short order,” Crapo said.