Biden signs into law $1.9tn American Rescue Plan Act

The Bill includes a series of provisions that will support US co-ops and credit unions

US co-operatives have welcomed the adoption of the American Rescue Plan Act signed into law by President Joe Biden on 11 March.

The US$1.9tn (£1.37tn) rescue package was passed by the House of Representatives on 10 March with a vote of 220 to 211, and by the Senate on 6 March with 50 voting in favour and 49 against.

The National Cooperative Business Association CLUSA International (NCBA CLUSA) commended Congress and the Biden-Harris Administration on the passage of act, which, it said, “takes historic steps to provide direct relief from the devastating impacts of Covid-19 and paves an equitable path toward recovery”.

NCBA-CLUSA said the bill would help socially disadvantaged groups build their economic independence and resilience including by investing in co-operative development.

The act also provides relief to small businesses through the State Small Business Credit Initiative, which will see community lenders – including credit unions, Community Development Financial Institutions (CDFIs) and Minority Depository Institutions – administer further support to small businesses to weather and recover from the hardships of the pandemic.

“This legislation makes clear that policymakers understand the importance of co-operative businesses in the US economy and as a tool to empower more people to own, control and benefit from the businesses they use,” said Doug O’Brien, president and CEO of NCBA CLUSA. “Co-operatives build a more inclusive and equitable economy for all people.”

The National Association of Federally Insured Credit Unions (NAFCU) welcomed the bill’s provisions around helping small businesses survive and recover from the pandemic and provide assistance to homeowners and renters. NAFCU had called on lawmakers to include additional tools to enable credit unions to better serve their members facing financial hardships and will continue its lobbying efforts.

While the bill expands some tax credits and provides another round of economic impact payments (EIPs) up to US$1,400, NAFCU called for the stimulus payments to be exempt from garnishment to ensure those most in need who may have their bank accounts frozen by garnishment orders are able to access their funds.

The apex also joined other financial industry trade and consumer groups in asking Congress to pass stand-alone legislation to address the issue and has sent a letter to Treasury Secretary Janet Yellen asking her support.

The act provides an additional US$4.5bn in emergency funding for the Low-Income Home Energy Assistance Program (LIHEAP) to pay for home heating and cooling for low-income households. The National Rural Electric Cooperative Association (NRECA) had asked Congress to increase LIHEAP funding by US$10bn.

An additional US$21.5bn in funding will be allocated for emergency rental assistance, which helps people pay their rent and utility bills. Further support will be available to homeowners affected by the pandemic via a new US$10bn programme to help them pay their mortgage, utility and internet bills.

“This package provides some much-needed relief to co-op consumer-members who have suffered job losses and other economic devastation caused by the pandemic,” Louis Finkel, NRECA’s senior vice president of government relations, said in press release.

A US$7.2bn emergency connectivity fund will also be set up at the Federal Communications Commission to provide funds to eligible schools and libraries to pay for up to 100% of internet service, wi-fi hotspots and equipment costs.

Restaurants affected by the pandemic will also receive support with US$25bn available in grants. These businesses will be able to apply for funding to pay their electric and internet bills.

Another US$50bn will be allocated to the Federal Emergency Management Agency (FEMA) Disaster Relief Fund, which could support co-ops impacted by storms, fires and other disasters.

President Biden said: “This historic legislation is about rebuilding the backbone of this country and giving people in this nation – working people and middle-class folks, the people who built the country – a fighting chance.”