PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update -- Friday, September 18, 2020
September 18, 2020
FedACTion Task Force
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PH Client Alerts
Beware of COVID Relief Fraud
The size and scope of the federal and state response to the economic crisis triggered by COVID-19 made some amount of criminal activity inevitable. Long lamented gaps in the infrastructure that links federal and state governments to individuals and businesses, particularly those related to the absence of reliable tools to ensure that electronic payments reach their intended recipients, made many of these programs an easy target for criminals. With six months having passed since the pandemic took hold, the magnitude of this fraud is now coming into view, and firms that offer a product through which unemployment benefits or relief funds have been distributed, or that support such a program, should consider conducting a risk assessment to identify and remediate any associated fraudulent activity.
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”), 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 the full text of the Paycheck Protection Program Flexibility Act of 2020, Enacted June 5, 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
Federal Reserve Board
Federal Reserve Board Releases Hypothetical Scenarios for Second Round of Bank Stress Tests in Light of COVID-19
September 17, 2020
The Board of Governors of the Federal Reserve System (Federal Reserve) released hypothetical scenarios for a second round of bank stress tests to be conducted this fall. The Federal Reserve announced that the additional round of stress tests is being performed due to continued uncertainty from the ongoing COVID-19 pandemic. Banks will be tested against two scenarios featuring severe recessions to assess their resiliency under a range of outcomes. The Federal Reserve expects to l release firm-specific results from banks’ performance under both scenarios by the end of this year.
Federal Reserve Bank of New York
New York Fed Announces Third “Economic Inequality Policy Series” Event
September 17, 2020
The Federal Reserve Bank of New York (New York Fed) will convene a virtual forum on COVID-19’s effects on communities of color on September 24, 2020. The event will be the New York Fed’s third installment of its policy series on economic inequality. Titled “Impacts of COVID-19 on Communities of Color and Policy Insights for an Equitable Economic Recovery,” the event will bring together researchers and policy-influencers to discuss insights for an equitable economic recovery focused on credit markets, the racial wealth gap and workforce equity.
Department of Labor
DOL Releases Unemployment Insurance Weekly Claims Report Update
September 17, 2020
The U.S. Department of Labor’s Unemployment Insurance Weekly Claims Report found that, in the week ending September 12, 2020, the advance figure for seasonally adjusted initial claims was 860,000, a decrease of 33,000 from the previous week’s revised level. The previous week’s level was revised up by 9,000 from 884,000 to 893,000. The 4-week moving average was 912,000, a decrease of 61,000 from the previous week’s revised average. The previous week’s average was revised up by 2,250 from 970,750 to 973,000.
International
Bank of England
Bank Rate Maintained at 0.1% as of September 2020
September 17, 2020
At its September 16, 2020 meeting, the Bank of England’s (BoE) Monetary Policy Committee (MPC) voted unanimously to maintain Bank Rate at 0.1%. The MPC voted unanimously for the BoE to continue with its existing programs of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, maintaining the target for the total stock of these purchases at £745 billion.
Agents' Summary of Business Conditions - 2020 Q3
September 17, 2020
The Bank of England (BoE) released a publication summarizing findings by the BoE’s 12 regional Agents following discussion with at least 700 UK businesses between early August and early September 2020. The publication set forth findings on consumer demand; activity levels related to business and financial services, manufacturing and construction; corporate financing conditions; property markets; investment; employment and pay; and costs and prices.
Latest Results from the Decision Maker Panel Survey, including the Impact of COVID-19 on UK Businesses
September 17, 2020
According to a summary of the results (up until August 2020) of the Decision Maker Panel (DMP), a survey of Chief Financial Officers from small, medium and large UK businesses, businesses reported a substantial impact from COVID-19 in the second quarter of 2020. Respondents to the DMP survey estimated that sales in the second quarter of 2020 were 30% lower than they otherwise would have been. Employment was reported to have been 5% lower and investment 33% lower. While still large, those impacts were less negative than had been previously expected.
Sales were reported to have begun to recover in the third quarter of 2020 with a further gradual recovery expected over the coming quarters. In the August survey, COVID-19 was expected to lower sales by 14% in the third quarter of this year, 12% in the fourth quarter of this year, 10% in the first quarter of 2021 and 5% in the second quarter of 2021. Investment was expected to recover more slowly than sales and to be around 12% below what it would have been in second quarter of next year.