PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Friday, May 15, 2020
May 15, 2020
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Major Developments
SBA Issues Interim Final Rule on PPP Eligibility of Certain Electric Cooperatives
May 14, 2020
The Small Business Administration (SBA) issued an interim final rule confirming that certain electric cooperatives are eligible for loans under the Paycheck Protection Program (PPP). Interim Final Rule
SBA and Treasury Extend Good Faith Safe Harbor Deadline
May 13, 2020
The Small Business Administration (SBA) and Department of the Treasury (Treasury) updated their Paycheck Protection Program (PPP) Frequently Asked Questions (FAQs) to extend the deadline to repay PPP funds until May 18, 2020 (FAQ 47).
Congress
Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.
Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.
Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.
U.S. Senate
Committee on Small Business and Entrepreneurship
Rubio Indicates Support for Safe Harbor for PPP Borrowers
May 12, 2020
Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, in a letter to Jovita Carranza, Administrator of the SBA, and Steven Mnuchin, Secretary of the Treasury, stated he “would support a broad declaration that all loans under $2 million will be presumed to have been applied for in good faith”, and that such a declaration “would ensure that over 99 percent of borrowers can be certain that they were eligible for the loan.”
Committee on Banking, Housing, and Urban Affairs
Brown Calls for Treasury to Protect Borrowers with Home Affordable Modification Program Modifications During Coronavirus Pandemic
May 14, 2020
Senator Sherrod Brown (D-OH), Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to Treasury Secretary Steven Mnuchin calling on the administration to protect borrowers who received modifications through the Department of the Treasury’s Home Affordable Modification Program (HAMP). The Treasury Department developed HAMP during the financial crisis to provide loan modifications to borrowers who were in unsustainable loans issued before January 2009. Although HAMP ended in December 2016, many HAMP modifications remain outstanding, including a number of borrowers who are still benefitting from HAMP “pay for success” incentive payments that reduce the borrower’s loan if the borrower makes timely payments over a six-year period.
U.S. House of Representatives
Committee on Financial Services
Subcommittee Holds Bipartisan Virtual Roundtable with Prudential Regulators
May 13, 2020
The Consumer Protection and Financial Institutions Subcommittee held a virtual roundtable with prudential regulators entitled “Update from Prudential Regulators.” The virtual roundtable panelists included Rodney Hood, Chairman of the National Credit Union Administration; Jelena McWilliams, Chairwoman of the Federal Deposit Insurance Corporation; Joseph Otting, Comptroller, Office of the Comptroller of the Currency; and Randal Quarles, Vice Chairman of the Board of Governors of the Federal Reserve System (the Federal Reserve Board).
Federal Agencies
Federal Reserve Board
Federal Reserve Board Issues Report on the Economic Well-Being of U.S. Households
May 14, 2020
The Federal Reserve Board issued its most recent Report on the Economic Well-Being of U.S. Households, Featuring Supplemental Data from April 2020. The report draws from the Federal Reserve Board’s seventh annual Survey of Household Economics and Decisionmaking, which examines the economic well-being and financial lives of U.S. adults and their families. The 2019 survey of over 12,000 adults was conducted in October of last year. To obtain updated information in the midst of closures and stay-at-home orders, a supplemental survey of just over 1,000 adults was conducted from April 3 to April 6, 2020, focusing on labor market effects and households’ overall financial circumstances. The April 2020 supplemental survey showed that 72 percent of adults were either “doing okay” financially (43%) or “living comfortably” (29%), reflecting decreases from the 75% of adults who were at least doing okay financially, and the 36% who were living comfortably, in the fall of 2019.
Federal Reserve Bank of New York
NY Fed Reports Federal Reserve and Treasury did not Intervene in FX Markets in First Quarter
May 14, 2020
In its quarterly report to the U.S. Congress, the Federal Reserve Bank of New York said the Federal Reserve and the Treasury did not intervene in foreign exchange markets during the January – March 2020 quarter. According to the report, during the first quarter of 2020, the U.S. dollar, as measured by the Federal Reserve Board’s broad trade-weighted dollar index, appreciated 7.1%, the largest quarterly appreciation since the fourth quarter of 1997. The report attributed the dollar’s significant appreciation primarily to “safe-haven”-related flows stemming from a sharp reduction in the global growth outlook related to the spread of the coronavirus.
Department of Housing and Urban Development/Federal Housing Administration
FHA Extends Foreclosure and Eviction Moratorium for Single Family Homeowners, and Flexibilities for Lenders and Appraisers
May 14, 2020
The Federal Housing Administration (FHA) announced an extension through June 30, 2020 of its foreclosure and eviction moratorium, for homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages. The FHA announced that certain policy flexibilities allowing alternatives for lenders to re-verify a borrower’s employment, and for appraisers to conduct desktop or exterior-only appraisals, were also being extended to June 30, 2020.
Federal Housing Finance Agency
FHFA Extends Foreclosure and Eviction Moratorium
May 14, 2020
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (collectively, the Enterprises) are extending their moratorium on foreclosures and evictions until June 30, 2020. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages. The current moratorium was set to expire on May 17, 2020.
Department of Labor
ETA Provides Guidance to States on PEUC Program
May 14, 2020
The U.S. Department of Labor’s Employment and Training Administration (ETA) announced the publication of updated guidance, including responses to FAQs, regarding the Pandemic Emergency Unemployment Compensation (PEUC) program authorized by the CARES Act. Section 2107 of the CARES Act creates a temporary federal PEUC program that provides up to 13 additional weeks of benefits to an individual who has exhausted their regular unemployment compensation, and provides funding to states for the program’s administration.
Department of Labor Issues News Release on Unemployment Insurance Weekly Claims
May 14, 2020
In a News Release regarding unemployment insurance weekly claims, the U.S. Department of Labor reported that in the week ending May 9, 2020, the advance figure for seasonally adjusted initial claims was 2,981,000, a decrease of 195,000 from the previous week's revised level; the previous week's level was revised up by 7,000, from 3,169,000 to 3,176,000; the four-week moving average was 3,616,500, a decrease of 564,000 from the previous week's revised average; and, the previous week's average was revised up by 7,000, from 4,173,500 to 4,180,500.
International
Bank of England
Bank of England’s Citizens’ Panels Issue Report
May 14, 2020
The chairs of the Bank of England’s (Bank) regional citizens’ panels issued a report exploring the main topics discussed by panel members. The report includes sections on the key themes raised by panel members including uncertainty, Brexit and COVID-19; inflation and living standards; inequality; and debt, credit and the banks.
Bank of England Prudential Regulation Authority
PRA Issues Policy Statement Providing Feedback to Consultation Paper Responses
May 14, 2020
The Bank’s Prudential Regulation Authority (PRA) issued a Policy Statement (PS) in order to provide feedback to responses to Consultation Paper (CP) 21/19 “Credit risk: Probability of Default and Loss Given Default estimation”. The CP consulted on proposals to implement the European Banking Authority’s (EBA’s) regulatory products that relate to Probability of Default (PD) estimation and Loss Given Default (LGD) estimation. The PS also contains the PRA’s final policy in an updated Supervisory Statement (SS) 11/13 ‘”Internal Ratings Based (IRB) approaches”.
UK Financial Conduct Authority
FCA Publishes Statement on Corporate Insolvency and Governance Bill
May 14, 2020
The Financial Conduct Authority (FCA) published a statement (Statement) regarding certain provisions in the forthcoming Corporate Insolvency and Governance Bill (Bill). The Statement takes the position that “[i]t is necessary to have specific provisions in the Bill for the financial services sector in order to protect consumers and financial stability”, and that “[t]hese provisions will help to ensure that the UK’s existing special insolvency regimes for financial sector firms remain effective, and that financial market participants have the legal certainty so that financial markets function effectively.” The Statement provides brief explanations of several measures in the Bill, including measures providing for a moratorium during which no legal actions can be taken or continued against a company without leave of the court, and, a three-month suspension of wrongful trading provisions beginning on March 1, 2020.
FCA Confirms Measures to Help Insurance Customers Suffering Financial Difficulties
May 14, 2020
The FCA confirmed a series of temporary measures designed to help customers who hold insurance and premium finance products, and who may be in financial difficulty because of COVID-19. The measures will take effect on May 18, 2020, and will be reviewed in the next three months in light of COVID-19-related developments.