1. Short title
This Act may be cited as the “Financial Institution Forbearance Act”.
Financial Institution Forbearance Act
A BILL
To amend the CARES Act to improve the temporary relief from troubled debt restructurings, and for other purposes.
2. Temporary relief from troubled debt restructurings
in paragraph (1), by striking “the earlier of December 31, 2020, or the date that is 60 days after the date on which the national emergency concerning the novel coronavirus disease (COVID–19) outbreak declared by the President on March 13, 2020 under the National Emergencies Act (50 U.S.C. 1601 et seq.) terminates” and inserting “March 1, 2021”; and
by adding at the end the following:
“(3) Depository institution—The term depository institution—
“(A) has the meaning given the term in section 3 of the Federal Deposit Insurance Act; and
“(B) means a State or Federal credit union, as such terms are defined, respectively, under section 101 of the Federal Credit Union Act.
“(4) Financial institution—The term financial institution means—
“(A) a depository institution;
“(B) a lender that is not a depository institution; and
“(C) an insurer.”
Applicability— Section 4013(b)(2)(A) of the CARES Act (15 U.S.C. 9051(b)(2)(A)) is amended by striking “December 31, 2019” and inserting “March 1, 2020”.
in subsection (c), by striking “financial institution” each place such term appears and inserting “depository institution”; and
by adding at the end the following:
“(e) Treatment by regulators
“(1) In general—With respect to any loan for which an election has been made by a depository institution under subsection (b), the appropriate Federal banking agency—
“(A) at the election of the depository institution, shall not require the depository institution to classify such loan as impaired for credit risk until April 1, 2022; and
“(B) at the election of the depository institution, shall, until April 1, 2022, for the purpose of calculating reserves and capital, and for any other accounting purpose, allow a depository institution to treat such loan in the same manner as the loan was (or would have been) treated on December 31, 2019.
“(2) Limitation
“(A) In general—Paragraph (1) shall not apply to a depository institution if the appropriate Federal banking agency determines that—
“(i) the depository institution was not well capitalized as of December 31, 2019;
“(ii) applying paragraph (1) to the depository institution would pose a direct risk to the Deposit Insurance Fund or the National Credit Union Share Insurance Fund; or
“(iii) there is reasonable cause to believe that the depository institution or an institution-affiliated party is violating, or is about to violate, a Federal statute or rule.
“(B) Cease and desist letter requirement—Before the appropriate Federal banking agency may make a determination under clause (ii) or (iii) of subparagraph (A), the appropriate Federal banking agency shall issue a cease and desist order to the depository institution and comply with the process required under section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. 1818) with respect to a cease and desist order.”
Balance sheet treatment of loans— Section 4013 of the CARES Act (15 U.S.C. 9051), as amended by subsection (c), is further amended by adding at the end the following:
“(f) Balance sheet treatment of loans—For purposes of a financial institution’s balance sheet, the financial institution shall place all loans for which an election has been made under subsection (b) into a separate account.”