NYLIB Sends Troubled Debt Restructurings Letter to Regulators and Senators

NEW YORK, July 9, 2020 /PRNewswire/ -- On June 30, 2020, the New York League of Independent Bankers (NYLIB) sent a letter to sitting members of Congress, the federal prudential banking agencies, and the Financial Standards Accounting Board (FASB) recommending that additional accounting relief be provided to community and other banks. NYLIB's letter notes that while Section 4013 of the CARES Act specifies that certain COVID-19 related loan modifications do not constitute troubled debt restructurings (TDRs), that relief is set to expire by year-end or even earlier.  In addition, while the banking agencies and FASB also have provided banks with TDR relief, that relief is limited to "short-term" loan modifications.  In light of the continuing adverse economic effects of COVID-19 on small businesses and other borrowers, NYLIB's letter recommends the extension and expansion of existing statutory and regulatory relief on accounting for TDRs.

Edward T. Lutz, NYLIB's President, commented as follows: "NYLIB's letter responds to the concerns we heard from NYLIB members and friends regarding accounting for COVID-19-related loan modifications. While the banking industry is greatly appreciative of the leadership that Congress and the federal banking agencies have demonstrated to date on TDR accounting in light of COVID-19, Section 4013 of the CARES Act and regulatory relief to date have presumed that the impact of COVID-19 would be severe but short-term in nature. As we near the four-month mark since President Trump's declaration of a National Emergency, it increasingly looks to be the case that the adverse economic impacts of COVID-19 will be longer-term in nature.  It is NYLIB's belief that additional statutory and regulatory relief on accounting for TDRs is therefore warranted."

Pryor Cashman LLP attorneys Pinchus D. Raice and Dustin N. Nofziger assisted NYLIB with its letter on a pro bono basis.

Read the letter in full here: Link

SOURCE New York League of Independent Bankers (NYLIB)