Bankers' wish lists will likely take a backseat to continued debates about pandemic relief programs like the Paycheck Protection Program. And with the nation focused on vaccination programs and the alarming virus caseloads and death rates, banking policy generally will likely be low on Congress's and the Biden administration's agenda.
In 2020, banks did win notable regulatory relief in Congress's pandemic relief packages, most recently in provisions related to troubled debt restructurings and the compliance deadline for the Current Expected Credit Losses accounting standard. And the industry's biggest legislative victory was reform of shell-company rules — shifting beneficial-owner reporting requirements away from banks — in a defense authorization bill.
But the focus on the pandemic in the new year means bankers probably won't win more sweeping reg relief from Congress in 2021. That said, they also likely will avoid any new regulations imposed by lawmakers, even if Democrats seize the Senate majority.
'COVID, COVID, COVID'
After Congress passed legislation to funnel roughly $900 billion into the economy to contain the fallout from the coronavirus pandemic, bankers will likely be in a wait-and-see mode for additional stimulus measures.
“When we think about the year ahead, the items on the agenda list will be COVID, COVID, and COVID,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading. “I think everything will be driven by the ongoing response, oversight of the response, and the arch of the recovery thereafter.”
The most recent stimulus legislation includes $284.5 billion in PPP funding for first- and second-time borrowers, $20 billion for the Economic Injury Disaster Loan advance program, $25 billion in emergency rental assistance and $12 billion in funding for community development financial institutions and minority depository institutions.
There could be more money on the way if Democrats win the Georgia Senate races. But Republican control of the chamber could mean the end of economic stimulus in response to the pandemic.
If Republicans maintain control of the Senate, Sen. Pat Toomey of Pennsylvania is poised to become chair of the Senate Banking Committee. In late 2020, Toomey led GOP calls for the Fed to shut down congressionally funded lending facilities that had been launched in response to the pandemic.
“Republicans have no stomach for another COVID-19 bill,” said Dan Crowley, a partner at K&L Gates. “They held their nose on this one. Pat Toomey tried to shut off the use of the discount window to fund liquidity facilities seemingly because he is fearful that if the Democrats had the ability to do whatever they want, they would run that program for purposes other than to avoid economic catastrophe.”
If Democrats gain control of the Senate, Sen. Sherrod Brown of Ohio will head the Banking Committee. In either scenario, Rep. Maxine Waters, D-Calif., will hold the gavel on the House Financial Services Committee.
Regardless of the outcome of the Georgia elections, Ballentine said bankers may have to wait until later in the new year to get another round of coronavirus-related relief.
“We obviously will continue to work extremely proactively on another round of funding for COVID relief," Ballentine said. "And I think that’s an appropriate place for Congress to place its attention. ... Whether that’s the first six months of the year or nine months of the year, that will be our focus — to help consumers and small businesses to help get through this crisis.”
No matter which party controls the Senate, Congress will likely hold oversight hearings to examine the PPP, the Fed's remaining emergency lending facilities, and other pandemic relief programs. The Coronavirus Aid, Relief, and Economic Security Act, enacted last spring, created the Congressional Oversight Commission to examine pandemic relief spending.
“You are going to also see oversight on the pandemic programs, the PPP and [Main Street Lending Program], and I think you will see that happening through that commission that has been created,” Tahyar said.
Boltansky said that if Toomey chairs the Senate Banking Committee, he will likely continue to push to limit the Fed's power.
“If Toomey is the chair, we will see a more pronounced focus on oversight, which will of course include the Federal Reserve 13(3) facilities and any attempts to institute new programs,” Boltansky said.
Bankers will likely continue to push to streamline the PPP loan forgiveness process.
“That has been one of the biggest focuses for CBA ever since the CARES Act passed and it will continue to be to make sure the implementation of that and rulemaking and guidance that is done by SBA and Treasury that we are communicating to the Hill how it is going, what is needed,” Whitfield said.
