Title: Financial Institution Forbearance Act
Policy area: Finance and Financial Sector

Summary:
Financial Institution Forbearance Act
This bill extends the time period during which a financial institution may suspend certain determinations and accounting principles for loan modifications related to the COVID-19 (i.e., coronavirus disease 2019) pandemic that would otherwise be categorized as a troubled debt restructuring for reporting purposes. Specifically, the bill extends this period to March 1, 2021. Currently, this period expires on the earlier of the date 60 days after the expiration of the emergency declaration or December 31, 2020.
Additionally, if a depository institution elects to suspend these requirements, the appropriate supervisory banking agency is generally prohibited, until April 1, 2022, from requiring these loans to be classified as impaired for credit risk purposes.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7913 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 7913

 To amend the CARES Act to improve the temporary relief from troubled 
              debt restructurings, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 31, 2020

 Mr. Luetkemeyer introduced the following bill; which was referred to 
                  the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To amend the CARES Act to improve the temporary relief from troubled 
              debt restructurings, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Institution Forbearance 
Act''.

SEC. 2. TEMPORARY RELIEF FROM TROUBLED DEBT RESTRUCTURINGS.

    (a) Definitions.--Section 4013(a) of the CARES Act (15 U.S.C. 
9051(a)) is amended--
            (1) 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
            (2) 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.''.
    (b) 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''.
    (c) Treatment by Regulators.--Section 4013 of the CARES Act (15 
U.S.C. 9051) is amended--
            (1) in subsection (c), by striking ``financial 
        institution'' each place such term appears and inserting 
        ``depository institution''; and
            (2) 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.''.
    (d) 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.''.
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