America’s love of roller coasters dates back to June 1884 when the country’s first roller coaster opened in Coney Island, New York. Inventor LaMarcus Thompson was inspired by the Mauch Chunk Switchback Railway in Eastern Pennsylvania, which carried coal downhill. The railway attracted so much interest that rides were eventually offered to the public. The Coney Island roller coaster, also named the Switchback Railway, only reached speeds of six miles per hour and ran in a straight line.
Despite its simple design, it was an instant success, and the concept quickly became popular.
Modern-day roller coaster rides will be limited this summer as parks delay openings and limit capacity due to COVID-19 restrictions. The ups, downs and curves of this year, however, will continue to feel like a roller coaster for many Americans.
Congress continues along a similar path. The next legislative response to COVID-19 was expected to come quickly, but it is now unclear when or if the House and Senate will come to an agreement. Updates to the Paycheck Protection Program (PPP) did, however, make it through Congress this past month.
PPP Flexibility Act Passed
After the massive PPP was rolled out in a matter of weeks, small businesses began asking for changes to allow the program to address rapidly developing challenges. After some debate, Congress overwhelmingly passed the PPP Flexibility Act, and it became law on June 5.
- Extension of the maturity period for unforgiven PPP loans from two years to five years
- Extension of the covered period during which a loan recipient may use the funds for certain expenses, while remaining eligible for forgiveness, from eight weeks to 24 weeks
- Increase to the non-payroll portion of a forgivable covered loan amount from 25% up to 40%
- Extension of the period in which an employer may rehire or eliminate a reduction in employment, salary or wages that would otherwise reduce the forgivable amount of a paycheck protection loan to Dec. 31, 2020
Housing Provisions in Infrastructure Act
The House will vote soon on an infrastructure package called the Moving Forward Act. Included are provisions from the Housing Is Infrastructure Act of 2020 drafted by Maxine Waters, Chairwoman of the House Financial Services Committee. This proposal aims to provide investments to create and preserve approximately 1.8 million affordable homes.
- $70 billion to address the capital needs for public housing homes
- $1 billion to address the capital needs for Section 515 and 514 rural homes
- $1 billion to support mitigation efforts that can protect communities from future disasters
- $5 billion for the Housing Trust Fund
- $100 million to help low-income elderly households in rural areas to age in place
- $10 billion for a Community Development Block Grant (CDBG) set-aside to incentivize states and cities to eliminate impact fees and responsibly streamline the process for development of affordable housing
- $5 billion for the HOME Investment Partnerships Program
- $5 billion for the Supportive Housing for the Elderly program (Section 202) and the Supportive Housing for Persons with Disabilities program (Section 811)
- $2.5 billion to the Capital Magnet Fund for competitive grants to Community Development Financial Institutions
Qualified Mortgage Proposed Rule Released
The Consumer Financial Protection Bureau (CFPB) issued a proposed rule to update the definition of a qualified mortgage (QM) under the Truth in Lending Act (Regulation Z).
Regulation Z requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay any residential mortgage loan. Loans that meet Regulation Z’s requirements for QM obtain certain protections from liability.
The proposed rule includes:
- Replacement of the 43% debt-to-income (DTI) ratio limit with a price-based threshold
- Price threshold calculated by comparing a loan’s annual percentage rate against the average prime offer rate for a comparable transaction – a loan will qualify if it’s less than two percentage points above and there are higher price thresholds included for smaller loans
- Request for input on hybrid approach with DTI and price thresholds used – it also asks for input on increasing DTI to 45%-48%
Brokered Deposit Bill Introduced in the Senate
Sen. Jerry Moran (R-Kan.) introduced S.3962 to replace Section 29 of the Federal Deposit Insurance Act (“FDI Act”), which sets restrictions on the acceptance of brokered deposits with limitations on asset growth. Section 29 of the FDI Act has not been updated in more than 30 years. The regulatory and supervisory environment has changed significantly over time, becoming both more responsive and more targeted to an increasingly online, mobile and diverse industry shaped by major technological advancements.
In December 2019, FDIC Chairman Jelena McWilliams suggested Congress consider “replacing Section 29 of the FDI Act with a simple restriction on asset growth for banks that are in trouble.” She confirmed her support for this action before the Senate Banking Committee and the House Financial Services Committee in May of this year.
Supreme Court Decision on CFPB
The Supreme Court ruled 5-4 in the case Seila Law v. Consumer Financial Protection Bureau that the single-director structure of the CFPB is unconstitutional as the president can only remove the director for cause instead of at will.