CA Governor Gavin Newsom Thanks CUs During Relief Announcement

Gavin Newsom

California Governor Gavin Newsom officially announced that more than 200 state-chartered credit unions and banks have committed to providing financial relief to the state’s consumers amid the economic fallout from the Coronavirus pandemic. For those able to respond to our requests, THANK YOU for your input! Our work together is making a huge impact.

Because of your action, credit unions were framed in a positive light by the Governor as he made several references to what credit unions do. Here’s what he assured state leaders and residents during his press conference today:

  • A 60-day moratorium on foreclosures (but does not include members already in the process).
  • Forbearance of mortgage payments for those impacted by COVID-19.
  • The nation’s largest banks (four out of five) have committed to a forbearance of mortgage payments for 90 days to consumers that have been impacted.
  • No negative payment history sent to credit-reporting agencies while a borrower is in a forbearance due to COVID-19.
  • The Governor’s office is working on additional concessions regarding fee waivers, such as ATM and overdraft from the big banks.
  • Governor Newsom has heard credit unions’ concerns and will allow for flexibility in their financial relief efforts. The DBO and the Governor’s Office has indicated flexibility in allowing credit unions to determined which fees will be charged as deemed appropriate by individual credit unions.
  • Governor Newsom urged patience for consumers when requesting relief from their financial institutions. (Example: Don’t all call at once—our credit union will take care of you)

In the days leading into today’s announcement, we heard from 187 state and federally chartered credit unions saying they are committed to providing payment extensions, fee waivers, emergency loans, mortgage forbearance, and deferments on commercial or business loans to members. We promised the Governor that all credit unions operating in California are committed to helping alleviate financial hardship on consumers as the state continues taking action to help its residents.
DBO Conversations
While it has been difficult for the Department of Business Oversight to get one agreement with all state-chartered financial institutions, the department has specifically asked our credit unions to:

  • Inform members of their willingness to work with them.
  • Streamline financial relief efforts and act quickly.
  • Refrain from negative payment history to credit-reporting agencies while a borrower is in a forbearance plan due to COVID-19.

The DBO indicated that credit unions can determine how long a period to offer loan forbearances, as well as what type of relief is needed and what is appropriate for the individual circumstances of members impacted by this crisis. The department also recognizes that credit unions are in the best position to determine the appropriate waiver of fees.

National Stimulus Bill
The U.S. Senate finalized legislation to provide economic stimulus to the nation in response to the Coronavirus/COVID-19 outbreak.

For credit unions, the current draft of the bill includes language adding credit union eligibility in the Treasury Department’s Paycheck Protection Program for small businesses, allowing those businesses to keep their employees paid and employed. Also, the SBA program is not just for SBA loans — it’s for all small businesses. Credit unions need to be aware that small businesses might be calling for assistance.Please stay tuned for more details on implementing this program.

In the coming days, soon after passage of the stimulus bill, CUNA will host a call with the Treasury Department, NCUA and credit unions to discuss implementation of the SBA section of the bill. For now, if you have questions, please know we are awaiting final passage of the bill and legislative language.

CUNA and the Leagues were also successful in achieving the following: 

  • Credit union eligibility for the Transaction Account Guarantee Program (TAG) addressing share insurance coverage for non-interest bearing transaction accounts.
  • Credit unions included in the language suspending accounting rules for Troubled Debt Restructures.
  • Credit unions granted increased access to the Central Liquidity Facility.

Again, this is what we know so far — it is not law yet. The House is likely to proceed immediately; however, there may be complications in how the vote happens. Either way, this package should be law in a short period of time.

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