Lawmakers told financial institutions in good shape, facing problems with loans, hiring
FRANKFORT, Ky. (WTVQ) – Nearly $ 8 billion in federal Paycheck Protection Program (PPP) loans come from Kentucky to help state businesses survive the pandemic, according to information provided to a legislative panel on Tuesday.
“As you can see, the financial services industry has really played a pivotal role in administering this program and providing this assistance to businesses,” said Charles Vice, state department commissioner for institutions. financial. He was testifying at the first meeting of the Interim Joint Banking and Insurance Committee this year.
Vice said 50,655 PPP loans were issued during the program’s first cycle, ending in August last year. The average loan for this round was $ 104,278. Vice said a further 31,647 loans were made in the second round, ending May 31. The average loan for the last round was $ 78,359.
Rep. Rachel Roberts, D-Newport, asked why the average loan size in the second round was lower. Vice said the second round focused on small businesses.
“More loans were given for smaller amounts to small businesses,” he said. “This is one of the big differences between the average loan size between the first and second drawdowns. There has been a deliberate and concerted effort to try to engage small businesses with P3 loans. “
Christy Carpenter, president-elect of the Bluegrass Community Bankers Association, attributed the lower amounts to the fact that self-employed workers and farmers qualified more easily for the second round of PPP loans. “This is what we saw at my community bank,” she told the committee.
In other questions related to the pandemic, Representative Shawn McPherson, R-Scottsville, asked if there had been an increase in the number of Kentucky homeowners defaulting on their mortgages due to moratoriums on evictions.
“One of the things that really… surprised me is that the arrears rates and the loss rates of our institutions have been relatively low so far,” Vice said. “At this time, we have not seen a significant increase in arrears, foreclosures or defaults.” He added that this could change as loan deferral programs implemented during the pandemic expire.
Vice said COVID-19 created other market problems.
“Uncertainty in the markets has led some to turn to non-traditional investments with an increased risk of fraud,” Vice said. He explained that social media posts were used to promote agenda-based commerce, possibly to manipulate markets and encourage pump-and-dump systems.
Representative Tom Smith, R-Corbin, asked about the possibility of regulating cryptocurrencies which have also seen their popularity rise due to uncertainty in traditional markets.
“One of the challenges is taking the right approach in this regard,” Vice said. “We watch it. We are engaging some companies in this area. We are talking to other states about it. And we’re looking at the best way for Kentucky to move forward. “