Financial Institution Forbearance Act

I 116TH CONGRESS 2D SESSION H. R. 7913 To amend the CARES Act to improve the temporary relief from troubled debt restructurings, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 31, 2020 Mr. LUETKEMEYER introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the CARES Act to improve the temporary relief from troubled debt restructurings, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Financial Institution 4 Forbearance Act’’. 5 SEC. 2. TEMPORARY RELIEF FROM TROUBLED DEBT 6 RESTRUCTURINGS. 7 (a) DEFINITIONS.—Section 4013(a) of the CARES 8 Act (15 U.S.C. 9051(a)) is amended— 9 VerDate Sep 11 2014 18:47 Aug 26, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H7913.IH H7913 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 7913 IH (1) in paragraph (1), by striking ‘‘the earlier of 1 December 31, 2020, or the date that is 60 days 2 after the date on which the national emergency con- 3 cerning the novel coronavirus disease (COVID–19) 4 outbreak declared by the President on March 13, 5 2020 under the National Emergencies Act (50 6 U.S.C. 1601 et seq.) terminates’’ and inserting 7 ‘‘March 1, 2021’’; and 8 (2) by adding at the end the following: 9 ‘‘(3) DEPOSITORY INSTITUTION.—The term ‘de- 10 pository institution’— 11 ‘‘(A) has the meaning given the term in 12 section 3 of the Federal Deposit Insurance Act; 13 and 14 ‘‘(B) means a State or Federal credit 15 union, as such terms are defined, respectively, 16 under section 101 of the Federal Credit Union 17 Act. 18 ‘‘(4) FINANCIAL INSTITUTION.—The term ‘fi- 19 nancial institution’ means— 20 ‘‘(A) a depository institution; 21 ‘‘(B) a lender that is not a depository in- 22 stitution; and 23 ‘‘(C) an insurer.’’. 24 VerDate Sep 11 2014 18:47 Aug 26, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7913.IH H7913 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 7913 IH (b) APPLICABILITY.—Section 4013(b)(2)(A) of the 1 CARES Act (15 U.S.C. 9051(b)(2)(A)) is amended by 2 striking ‘‘December 31, 2019’’ and inserting ‘‘March 1, 3 2020’’. 4 (c) TREATMENT BY REGULATORS.—Section 4013 of 5 the CARES Act (15 U.S.C. 9051) is amended— 6 (1) in subsection (c), by striking ‘‘financial in- 7 stitution’’ each place such term appears and insert- 8 ing ‘‘depository institution’’; and 9 (2) by adding at the end the following: 10 ‘‘(e) TREATMENT BY REGULATORS.— 11 ‘‘(1) IN GENERAL.—With respect to any loan 12 for which an election has been made by a depository 13 institution under subsection (b), the appropriate 14 Federal banking agency— 15 ‘‘(A) at the election of the depository insti- 16 tution, shall not require the depository institu- 17 tion to classify such loan as impaired for credit 18 risk until April 1, 2022; and 19 ‘‘(B) at the election of the depository insti- 20 tution, shall, until April 1, 2022, for the pur- 21 pose of calculating reserves and capital, and for 22 any other accounting purpose, allow a deposi- 23 tory institution to treat such loan in the same 24 VerDate Sep 11 2014 18:47 Aug 26, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H7913.IH H7913 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 7913 IH manner as the loan was (or would have been) 1 treated on December 31, 2019. 2 ‘‘(2) LIMITATION.— 3 ‘‘(A) IN GENERAL.—Paragraph (1) shall 4 not apply to a depository institution if the ap- 5 propriate Federal banking agency determines 6 that— 7 ‘‘(i) the depository institution was not 8 well capitalized as of December 31, 2019; 9 ‘‘(ii) applying paragraph (1) to the 10 depository institution would pose a direct 11 risk to the Deposit Insurance Fund or the 12 National Credit Union Share Insurance 13 Fund; or 14 ‘‘(iii) there is reasonable cause to be- 15 lieve that the depository institution or an 16 institution-affiliated party is violating, or is 17 about to violate, a Federal statute or rule. 18 ‘‘(B) CEASE AND DESIST LETTER RE- 19 QUIREMENT.—Before the appropriate Federal 20 banking agency may make a determination 21 under clause (ii) or (iii) of subparagraph (A), 22 the appropriate Federal banking agency shall 23 issue a cease and desist order to the depository 24 institution and comply with the process re- 25 VerDate Sep 11 2014 18:47 Aug 26, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H7913.IH H7913 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 7913 IH quired under section 8(b) of the Federal De- 1 posit Insurance Act (12 U.S.C. 1818) with re- 2 spect to a cease and desist order.’’. 3 (d) BALANCE SHEET TREATMENT OF LOANS.—Sec- 4 tion 4013 of the CARES Act (15 U.S.C. 9051), as amend- 5 ed by subsection (c), is further amended by adding at the 6 end the following: 7 ‘‘(f) BALANCE SHEET TREATMENT OF LOANS.—For 8 purposes of a financial institution’s balance sheet, the fi- 9 nancial institution shall place all loans for which an elec- 10 tion has been made under subsection (b) into a separate 11 account.’’. 12 Æ VerDate Sep 11 2014 18:47 Aug 26, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H7913.IH H7913 pamtmann on DSKBC07HB2PROD with BILLS