Is Your CU Eligible For ECIP?

March 10, 2021 at 9:08 am Leave a comment

On Thursday the Treasury unveiled regulations and guidance implementing the Emergency Capital Investment Program (ECIP) which sets aside $9B to invest in Community Development Financial Institutions (CDFI’s) and Minority Depository Institutions (MDI’s) which can use the money to assist communities negatively impacted by the pandemic.  It has created a lot of interest in CU Land because of its extremely attractive terms.  Funds provided to CUs under the program are interest free for the first 24 months. The program however is trickier than it appears, particularly as it relates to secondary capital.

 To be eligible for funding, your credit union must be either a CDFI or a MDI.  This means that even if your credit union has become a Low Income Credit Union (LICU) it does not qualify to participate for these loans.

Congress created the program in the second round of stimulus funding in December. Under Section 104A the program was created   

“…to support the efforts of low- and moderate-income community financial institutions to, among other things, provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities, including persistent poverty counties, that may be disproportionately impacted by the economic effects of the COVID-19 pandemic, by providing direct and indirect capital investments in low- and moderate-income community financial institutions.”

With this charge it is still not entirely clear how the treasury will decide how much $ eligible FIs will be awarded.

Here is where I will get a little into the weeds.  If a credit union does qualify for funding under the program your credit union will still have to be eligible for and be approved by NCUA to have the funds classified as Secondary Capital.  Otherwise it will reduce your net worth ratio.  These funds are not being set aside for financially struggling institutions they are being set aside for financial institutions in financially struggling communities.  

What regulations apply in making a secondary capital classification request?  Good question.  As readers of this blog know NCUA has approved regulations basically replacing secondary capital with subordinated debt.  However, these new regulations don’t become effective until next year.  Credit unions should follow the existing secondary capital regulations, paying special attention to this detailed and, in my ever-so-humble opinion, overly burdensome guidance on secondary capital.

Vaccine Eligibility Expansion

As you may have heard, and judging by the number of emails on the subject, many of you did, the Governor announced yesterday that vaccine eligibility would be expanded to include:

  • Public-facing government and public employees
  • Not-for-profit workers who provide public-facing services to New Yorkers in need
  • Essential in-person public-facing building service workers

At this point we are just dealing with a press release.  The Association has reached out for clarification on precisely which employees are going to be included in this expansion and once we get additional information we will pass it on.   

Entry filed under: COVID-19, Federal Legislation, New York State, Regulatory. Tags: , , , , , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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