Lawmakers said financial institutions are in good shape, face problems with loans, hiring

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Interim Joint Banking and Insurance Committee member Tom Smith, R. Corbin, inquires about the digital currency Bitcoin.

FRANKFORT, KY (WTVQ) – Nearly $ 8 billion in Federal Payroll Protection Program (PPP) loans have been disbursed in Kentucky to help businesses across the state weather the pandemic, according to information provided to the legislature on Tuesday.

“As you can see, the financial services industry has really played an important role in managing this program and helping companies,” said Charles Weiss, Commissioner for the State Department of Financial Institutions. He testified ahead of the first meeting of the Interim Joint Committee on Banking and Insurance this year.

The vice said that 50,655 PPP loans were issued during the first round of the program, which ended in August last year. The average loan size in this round was $ 104,278. Vice reported that an additional 31,647 loans were disbursed during the second round, which ended on May 31. The average loan amount in the last round was $ 78,359.

Rep. Rachel Roberts of Newport asked why the average loan amount in the second round was lower. Vice said the second round focused on small businesses.

“More loans were issued in smaller dollar amounts to small businesses,” he said. “This is one of the big differences between the average loan size between the first and second draw. A deliberate concerted effort has been made to try and attract small businesses through PPP loans. ”

Christie Carpenter, president-elect of the Bluegrass Community Bankers Association, attributed the smaller amounts to the fact that it is easier for the self-employed and farmers to get a second round of PPP loans. “This is what we saw at my public bank,” she told the committee.

In other pandemic-related questions, Rep. Sean McPherson, R-Scottsville, asked if the number of Kentucky homeowners defaulting on mortgages has increased due to the eviction moratorium.

“One of the things that surprised me a lot … was that the level of arrears and the loss rate of our institutions was relatively low at the moment,” Weiss said. “To date, we have not seen a significant increase in past contributions, foreclosures or defaults.” He added that this could change as the loan deferral programs implemented during the pandemic expire.

Weiss said COVID-19 has created other problems in the market.

“Uncertainty in the markets has led some to switch to unconventional investments with an increased risk of fraud,” Weiss said. He explained that social media posts have been used to promote agenda-driven trading, possibly to manipulate markets and encourage pump and dump schemes.

Representative Tom Smith, R.-Corbin, asked about the possibility of regulating cryptocurrencies, which have also grown in popularity due to uncertainty in traditional markets.

“One of the challenges is getting it right,” Weiss said. “We’re looking at it. We involve several companies in this. We are talking about this with other states. And we’re looking for the best way for Kentucky to move forward. “

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