OCC

The new regulation is intended as a workaround for banks affected by the 2015 decision that created legal uncertainty for loans sold across state lines.

The agencies issued a rule to better enable banks to participate in two of the Federal Reserve’s lending facilities and “support the flow of credit to households and businesses.”

The OCC and FDIC are holding off on easing debt limits in response to the coronavirus pandemic, leaving billions of dollars locked up at banking subsidiaries that could be used for lending amid the deepening economic crisis.

The agencies will give the industry another month to submit feedback on the so-called covered fund portion of the rule "in light of potential disruptions resulting from the coronavirus.”

Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.

Sen. Mark Warner led a group of Democratic senators in calling on bank, credit union and GSE regulators to give detailed instructions on helping consumer and commercial borrowers hurt by the COVID-19 outbreak.

The agencies recommend steps banks should take to proactively prevent disruption of operations, minimize contact between staff and customers, and plan for how affected employees reenter the workplace, among other things.

Most states have some kind of pricing limit on consumer loans. But proposals for a national usury law divide even Democrats, some of whom are concerned about restricting credit.

A proposed change could resurrect bond buckets, but loan industry observers also point to "covered fund" changes shielding loans from a potentially disruptive court decision.

Nonbanks hold a disproportionate percentage of the worst-rated loans, but banks hold a majority of the market, and risk management safeguards are largely untested, according to an interagency report on shared national credit.