Neil Haggerty

New research reveals the financial services industry both prefers and predicts an incumbent win in November.

Fannie Mae and Freddie Mac have been slammed for planning an additional refinancing charge to cover COVID-related losses, but the head of the Federal Housing Finance Agency defended the policy in House testimony.

Legislation favorable to the industry would be unlikely to pass in a divided Congress, but the biggest benefit for banks and credit unions of Republicans' retaining control of the chamber would be defending against the disruption of a Democratic blue wave.

The Senate Banking Committee met Wednesday to review central bank lending facilities such as the Main Street Lending Program, which provides bank-issued loans to middle-market firms. But some lawmakers on the panel said the focus of pandemic relief has been misplaced.

A second-term Trump administration would likely continue its deregulatory efforts, focus on Fannie Mae and Freddie Mac's exit from conservatorship, and seek to facilitate fintech participation in the banking system.

Besides reauthorizing the Paycheck Protection Program, Congress should upgrade the loan forgiveness process, offer businesses the chance to take out a second loan and ensure the pricing satisfies lenders, bankers say.

The enhanced jobless benefits in the coronavirus relief law enacted in March helped limit delinquencies and maintain consumer spending, analysts say. In their follow-up stimulus plan, Senate Republicans want to cut those benefits from $600 to $200 a week.

Fannie Mae and Freddie Mac have imposed heavy price adjustments for loans that were granted relief under the pandemic relief law enacted in March.

The panel later this month will vote on the nomination of Judy Shelton, whose views on certain policy issues have met with skepticism from both Democrats and Republicans.

Chris Dodd and Barney Frank said the legislation — nearing its 10th anniversary — put banks in position to be a stabilizing force during the coronavirus crisis.

The inability of Democrats and Republicans to agree on a chairperson and lack of sufficient personnel have made it harder for the commission to do its job — hold Treasury and the Fed accountable for implementing the coronavirus relief law, observers say.

The Fed chairman updated senators about the agency's new credit facility for midsize firms struggling in the pandemic. He also left open the possibility of additional stress tests to gauge the industry’s coronavirus response.

Evidence suggests some minority-owned businesses can’t access loans, and the Trump administration is under pressure to report borrower demographics. The issue is gaining attention against the backdrop of protests over the George Floyd killing.

The congressional showdown over the pace of rulemaking during the pandemic is a hardening of older positions on banking policy ahead of the 2020 elections, observers said.

The central bank and other agencies have come under pressure to be transparent about their use of funds authorized by the recent pandemic rescue law.

The Senate Banking Committee chair will work with the heads of other panels in overseeing the $2 trillion stimulus package that Congress passed last month.

A bipartisan group of lawmakers wrote in a letter to the Treasury secretary that the Financial Stability Oversight Council should create a liquidity facility to deal with a flood of forbearance requests brought on by the coronavirus pandemic.

Measures that delay the Current Expected Credit Losses standard and reduce a community bank capital ratio are temporary, but the industry now sees an opening to argue that they should be permanent.

If Capitol Hill plans another round of stimulus, Democrats could have more leverage to demand steps such as suspending overdraft fees or placing a temporary cap on consumer lending rates.

The $2 trillion deal passed by the Senate late Wednesday would aim to put banks and consumers alike on stronger financial footing as they weather the coronavirus pandemic.