US House of Representatives adopts HEROES stimulus act: Co-op movement responds

Put forward by the Democratic Party, the bill introduces reforms that will impact the co-operative and credit union sectors

A Covid-19 stimulus bill presented by House Democrats was passed by the House of Representatives by a vote of 208-199 on 15 May.

The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act is a US$3tn (£2.44tn) relief package, which features a series of measures designed to provide relief, as well as tackle the spread of the pandemic. These include allocating funding to local governments, individuals and health systems and introducing new prevention procedures such as requiring passengers to wear masks on airplanes and public transit.

Presenting the bill, House Speaker Nancy Pelosi said: “The HEROES Act focuses on three pillars: opening our economy safely and soon; honoring our heroes; and, then, putting much-needed money into the pockets of the American people.”

The HEROES Act would be the largest relief package in the US’ history. The proposed spending would be in addition to the US$2.2tn (£1.78tn) CARES stimulus legislation that has already been enacted. As part of the CARES Act, the government is providing US$349bn (£281bn) through a paycheck protection programme (PPP) to help businesses keep workers on their payroll. The US Small Business Administration has already indicated that most co-operative business sectors will be able to access PPP loans, including agriculture, purchasing, consumer food, worker and electric co-ops.

However, the HEROES Act introduces changes to the newly established PPP to expand eligibility to housing co-operatives and all non-profits, including electric co-operatives, a measure welcomed by the National Co-operative Business Association (NCBA Clusa). The Heroes Act also extends the covered period of the Paycheck Protection Program to 31 December 2020. 

In a statement on the HEROES Act, NCBA CLUSA president and CEO Doug O’Brien highlighted the support of the House Small Business Committee, with jurisdiction over the US Small Business Administration. “We thank chairwoman Nydia Velázquez and her dedicated staff who have led the effort to ensure co-operatives have equal access to Small Business Administration programs during this extraordinary time. This is an important step to ensure that co-ops can continue to provide essential services to their communities,” he said. 

Related: US co-ops eligible for Paycheck Protection Program

The credit union sector also welcomed the new act, but warned that more support was needed for the sector. One of the provisions of the HEROES Act is to allocate US$1bn for the Community Development Financial Institutions Fund (CDFI), which serves mission-driven financial institutions such as credit unions.

Another provision that could impact credit unions is the introduction of broad mortgage forbearance requirements. The HEROES Act would see all single-family covered mortgages become eligible for forbearance requests. The Bill would grant automatic forbearance for 60 days for any mortgage loans that are 60 days delinquent and have not yet been granted forbearance.

Commenting on the HEROES Act, the president and chief executive of the Credit Union National Association (CUNA), Jim Nussle, said: “CUNA supports several provisions in the bill and has concerns with others.

“House passage of the HEROES Act starts a process for a new round of recovery legislation intended to help consumers, small businesses and the economy in general weather and rebuild from the crisis.

“We were happy to see a number of the provisions that will help credit unions remain in a position to serve their members and communities, but we were disappointed that the legislation includes several provisions that would actually make it more difficult for consumers and small businesses to access safe and affordable financial services. This is the first step in the process, not the last word.”

The National Association of Federally-Insured Credit Unions (NAFCU) expressed similar concerns. President and CEO Dan Berger said in a statement: “The House of Representatives’ willingness to act to take the lead on the first step of the next phase of pandemic relief is commendable.

 “While there are provisions in the HEROES Act that we applaud, such as changes to existing SBA lending programs and an additional US$1bn to the CDFI Fund, there are others that raise more concerns than they address. The legislation’s broad mandated blanket loan forbearance provisions and new limits on debt collection are among those we think require a closer look, as they could threaten to deepen our economic recession by posing safety and soundness risks to lenders if enacted.

“There are other proposals that already have bipartisan support but were not included in the HEROES Act, such as relief from the credit union member business lending cap and allowing credit unions greater flexibility in their lending. These would without a doubt help small businesses and consumers. NAFCU will continue working with Congress and the administration throughout this process to ensure credit unions can better serve their members, small businesses and local communities amid the pandemic.”

The bill is yet to be discussed in the Senate, where it faces opposition from Republicans, who dominate the house.

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