1 1 (September 18, 2020)

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               Researh Sevice






The CARES Act (P.L. 116-136): Provisions

Designed to Help Banks and Credit Unions



Updated September 18, 2020
The economic effects of the coronavirus (COVID- 19) pandemic may cause numerous borrowers to miss
loan repayments, potentially leading to distress at banks and credit unions. Because of the importance of
banking to the economy, federal depository regulators have implemented safety and soundness
regulations, including lending, capital, and liquidity rules. Regulators also have the authority to supervise
banks, which includes requiring banks to report financial information.
As part of Congress's response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act
(CARES Act; P.L. 116-136) includes four sections-4011, 4012, 4013, and 4014-that temporarily relax
some of the regulations banks face. Section 4016 expands access to the Central Liquidity Facility (CLF),
which is a liquidity facility for credit unions that exists at the National Credit Union Administration
(NCUA). This Insight examines those sections. For descriptions of all sections of Title IV of the CARES
Act, see CRS Report R46301, Title IV Provisions of the CARES Act (PL. 116-136), coordinated by
Andrew P. Scott.
Policy makers have implemented other measures addressing concerns related to financial institutions. The
CARES Act expands the Federal Deposit Insurance Corporation's (FDIC's) authority to guarantee bank
liabilities, which is the subject of CRS Insight IN11307, The CARESAct (PL. 116-136) Section 4008:
FDIC Bank Debt Guarantee Authority, by David W. Perkins. CRS Insight IN11278, Bank and Credit
Union Regulators 'Response to COVID-19, describes the actions taken by depository regulators under
exiting authority to address issues in the banking industry. CRS Insight IN 11259, Federal Reserve:
Recent Actions in Response to COVID-19, discusses the programs the Federal Reserve has set up to
provide liquidity to financial markets.


OCC Lending Limit Waiver

National banks are subject to limits on how much they can lend to a single borrower relative to their
capital and their portfolio characteristics, unless the loan qualifies for an exception enumerated by statute.
The Office of the Comptroller of the Currency (OCC) generally has relatively narrow authority to
approve certain loans for an exception to the limit. Section 4011 grants the OCC broad authority to
exempt loans when it is in the public interest. This authority terminates the earlier of (1) the termination

                                                               Congressional Research Service
                                                               https://crsreports.congress.gov
                                                                                    IN11318

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