Policy and Regulation

Homeowners reeling from coronavirus-induced economic shock are already enduring extremely long wait times while trying to get relief. Legislation passed last week could worsen the logjams.

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.

The regulation issued late on Tuesday directs state-regulated financial institutions to give mortgage borrowers at least 90 days of forbearance if they can show financial hardship resulting from the coronavirus pandemic. It also requires banks and credit unions to provide relief on ATM fees and credit card late payment fees.

Regulators' decision to delay reporting for troubled-debt restructurings should allow banks and credit unions to be more nimble modifying loans impaired by the coronavirus outbreak.

The central bank's sweeping actions suggest a cash shortage gripping sectors directly hit by the pandemic. Banks were supposed to be protected by Dodd-Frank but are still vulnerable to a funding domino effect.

One option could be issuing an announcement that makes clear regulators won’t likely object to risky funding arrangements that they’ve previously frowned upon, said the person who requested anonymity because the discussions might not lead to any actions.

Refinancing activity is surging, existing borrowers are inquiring about loan modifications, loan closings are being delayed by more complex credit checks — and banks are short on people to handle it all.

In signing off on deposit insurance for the payments giant and student loan servicer, the FDIC sanctioned the first new industrial loan companies in over a decade.

FHFA Director Mark Calabria said the health crisis will complicate the release of a proposal establishing new capital requirements for Fannie Mae and Freddie Mac.

If banks are unable to weather the economic fallout from the outbreak, calls for more dramatic reforms could get louder.