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Bill Proposed in House Would Allow Small Banks to Exempt PPP Loans From Asset Totals

  • House proposal would allow small banks and credit unions to exempt Paycheck Protection Program loans from regulators’ calculations of their assets
  • Community lenders have raised concerns that participating in PPP might swell their assets enough to make them subject to new regulatory requirements
  • Measure could also encourage small lenders to continue offering PPP loans if the program receives new funding

Loans made through the Paycheck Protection Program would not be included in regulators’ calculations of the total assets of small banks and credit unions under a bill currently introduced in the House of Representatives. The measure intends to prevent community lenders who participated in the program from being subjected to more stringent regulations, while also encouraging them to continue offering PPP loans if further funding becomes available.

Smaller lenders have voiced concerns that loans made through PPP might swell their assets enough that they will exceed $10 billion, making them subject to greater regulations under the Dodd-Frank Act. More than 5,000 lenders with assets under $10 billion distributed PPP funds, accounting for $233.78 billion in the allocated money – about 45 percent of all loans.

The proposed legislation would require federal regulators to exclude PPP loans from their calculations on lenders’ asset sizes, which are used for purposes such as determining capital ratios and deposit insurance premiums. This requirement would apply to financial institutions with assets of less than $15 billion, and these lenders would still have to report PPP loans as assets on their quarterly call reports.


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