PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Friday, May 8, 2020
May 08, 2020
FedACTion Task Force
Subscribe to PH FedACTion: Financial Regulatory Updates
PH Client Alerts
Click here to read more from our Coronavirus series.
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.
Federal Agencies
Department of the Treasury
FSOC Executive Meeting Scheduled for Thursday, May 14, 2020 regarding Nonbank Mortgage Liquidity
May 7, 2020
On May 14, 2020, U.S. Secretary of the Treasury Steven T. Mnuchin will preside over an executive meeting of the Financial Stability Oversight Council (FSOC). The preliminary agenda includes an update from the FSOC’s Task Force on Nonbank Mortgage Liquidity and an update on market developments related to COVID-19.
Fannie Mae
COVID-19 Pushes Consumer Confidence in Housing to Lowest Level since November 2011
May 7, 2020
Fannie Mae released data detailing the effects of COVID-19 on consumer confidence in housing. After falling 11.7 points last month, the Fannie Mae Home Purchase Sentiment Index® (HPSI) decreased an additional 17.8 points in April to 63.0, its lowest reading since November 2011. Five of the six HPSI components decreased month over month, as consumers reported a markedly more pessimistic view of home buying and home selling conditions. Moreover, on net, more consumers reported that their household income is significantly lower today than it was 12 months ago. Year over year, the HPSI is down 25.3 points.
Fannie Mae Helps Multifamily Renters Impacted by COVID-19 with ‘Renters Resource Finder’
May 7, 2020
Fannie Mae announced it has introduced a Renters Resource Finder to help renters facing financial hardship due to COVID-19 understand the options available to them. The Renters Resource Finder is an online tool that identifies apartments and other multifamily properties financed by Fannie Mae, whose residents are eligible for eviction protection under the federal CARES Act, along with other resources. If they live in a Fannie-Mae financed property, they will have access to Fannie Mae’s Disaster Response Network™, which offers help navigating the broader financial challenges caused by COVID-19.
Freddie Mac
Freddie Mac Launches Digital Tool to Help Renters Determine Protections from Eviction
May 7, 2020
Freddie Mac announced it has created an online multifamily property lookup tool to help renters determine if they are temporarily protected from eviction due to non-payment of rent during the COVID-19 pandemic. The online tool allows renters to find out if they reside in a property with a Freddie-Mac backed mortgage by searching a property’s address. Under the CARES Act, renters living in properties with federally backed mortgage loans, including those purchased or securities by Freddie Mac, are temporarily protection from eviction filings due to non-payment of rent through July 25, 2020.
Department of Labor
Unemployment Insurance Weekly Claims During COVID-19
May 7, 2020
The Department of Labor released information on unemployment insurance weekly claims. In the week ending May 2, 2020, the advance figure for seasonally adjusted initial claims was 3,169,000, a decrease of 677,000 from the previous week’s revised level. The previous week’s level was revised up by 7,000, from 3,839,000 to 3,846,000. The four-week moving average was 4,173,500, a decrease of 861,500 from the previous week’s revised average. The previous week’s average was revised up by 1,750, from 5,033,250 to 5,035,000.
International
Bank of England
Statement by the Bank of England and Prudential Regulation Authority on Resolution Measures and Covid-19
May 7, 2020
The Bank of England (BoE) and the Prudential Regulation Authority (PRA) have announced changes to resolution measures aimed at alleviating operational burdens on PRA-regulated firms in response to the Covid-19 pandemic. The BoE has also provided an update for such firms on the Minimum Requirement for Own Funds and Eligible Liabilities.
The Financial Services Regulatory Initiatives Forum launches Regulatory Initiatives Grid to help Financial Firms’ Planning
May 7, 2020
The Financial Services Regulatory Initiatives Forum (Forum) has launched a new initiative to help financial firms prepare for upcoming regulatory work - the Regulatory Initiatives Grid (Grid). The introduction of the Grid, announced by Chancellor of the Exchequer Rishi Sunak in March’s Budget, has been brought forward by the Forum to help firms stretched by the impact of COVID-19. The Forum is comprised of the Bank of England, Prudential Regulation Authority, Financial Conduct Authority, Payment Systems Regulator and Competition and Markets Authority, with HM Treasury attending as an observer member. The Grid lays out the planned timetable for major initiatives, including the transition from LIBOR and the introduction of financial services legislation to prepare for the end of the EU withdrawal transition period.
Monetary Policy Report and Interim Financial Stability Report - May 2020
May 7, 2020
The Bank of England (BoE) has published its quarterly Monetary Policy Report alongside an interim Financial Stability Report. Together, they provide a scenario for the path of the UK economy in light of Covid-19 and assess the financial system’s resilience to that scenario. The reports note, in summary: (i) COVID-19 is dramatically reducing jobs and income in the UK; and (ii) the BoE is supporting households and businesses by keeping interest rates low and helping banks to expand lending, in order to help the economy recover and keep the financial system safe and stable.
Bank Rate Maintained at 0.1% - May 2020
May 7, 2020
The Monetary Policy Committee (MPC) of the Bank of England (BoE) voted unanimously to maintain the current bank rate at 0.1%. The MPC voted by a majority of 7-2 for the BoE to continue with the program of £200 billion of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, to take the total stock of such purchases to £645 billion.
Monthly Decision Maker Panel Data - April 2020
May 7, 2020
The Bank of England has released data from its monthly Decision Maker Panel (DMP) for April, 2020. The DMP is a survey of Chief Financial Officers from small, medium and large UK businesses used to monitor developments in the economy and track businesses’ views. Businesses were asked about the expected impact of the spread of COVID-19 on their sales, employment and investment in Q2 2020. On average, firms expected their sales in Q2 to be 44% lower than they would have otherwise been, employment to be 18% lower and investment to be 50% lower. Businesses also reported that 36% of employees were furloughed in April, and 86% of businesses reported that COVID-19 was their largest current source of uncertainty, up from 50% in March.
Monthly aggregate-level data for a limited number of DMP series up to April 2020
Quarterly aggregate-level data for all survey questions up to April 202
Bank of England Prudential Regulation Authority
Statement by the PRA on Conversion of Pillar 2A Capital Requirements from Risk Weighted Assets Percentage to a Nominal Amount
May 7, 2020
The Prudential Regulation Authority (PRA) has released a statement that, in response to the economic shock of COVID-19, it is setting all Pillar 2A capital requirements as a nominal amount, instead of a percentage of total Risk Weighted Assets (RWAs) in order to alleviate unwarranted pressure on firms. Consistent with the Bank of England’s approach to stress testing, the PRA does not believe that RWAs are a good approximation for the evolution of the risks captured in Pillar 2A in a stress. The PRA will continue to regularly assess the appropriate level of Pillar 2A; given such regular assessments, the PRA believes the most proportionate approach is to set Pillar 2A as a nominal amount between assessments.
Statement by the Prudential Regulation Authority on Prioritization in Light of COVID-19
May 7, 2020
The Prudential Regulation Authority (PRA) announced further details of its plans to support PRA-regulated firms and enable them, and the PRA, to focus their resources on the highest priority work. Such details are in furtherance of the joint announcement made on March 20, 2020 by the Bank of England (Bank) and the PRA, which set out a number of measures aimed at alleviating operational burdens on PRA-regulated firms. The PRA’s work, alongside that of the wider Bank, is focused on ensuring that banks and insurers can play their part in supporting the UK economy to respond to the significant impact of COVID-19. The Prudential Regulation Committee and the Financial Policy Committee have agreed to reprioritization in the following areas of the PRA’s work: (i) climate change; (ii) LIBOR transition; (iii) Insurance Stress Test 2019; and (iv) Stressed VAR.