PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Thursday, April 30, 2020
April 30, 2020
FedACTion Task Force
PH Client Alerts
Click here to read more from our Coronavirus series.
Major Developments
Joint Statement by Secretary Steven T. Mnuchin and Administrator Jovita Carranza on the Review Procedure for Paycheck Protection Program Loans
April 28, 2020
U.S. Treasury Secretary Steven T. Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza announced that, in order to further ensure that Paycheck Protection Program loans are limited to eligible borrowers, the SBA will review all loans in excess of $2 million, in addition to other loans as appropriate, following the lender’s submission of the borrower’s loan forgiveness application. Regulatory guidance implementing this procedure will be forthcoming.
Treasury and SBA Update Paycheck Protection Program FAQ Concerning Eligibility of Companies that have Undergone a Change in Ownership after February 15, 2020
April 29, 2020
The U.S. Department of the Treasury and the Small Business Administration have updated their guidance on the Paycheck Protection Program (PPP) to clarify that a business that was in operation on February 15, 2020 but had a change of ownership after February 15, 2020 is eligible for a PPP loan, as long as it meets the other eligibility criteria (FAQ 38).
SBA Issues Interim Final Rule on Paycheck Protection Program Disbursement Requirements
April 28, 2020
The Small Business Administration (SBA) issued an Interim Final Rule on Paycheck Protection Program (PPP) disbursement requirements. The Interim Final Rule clarifies that: (i) the borrower cannot take multiple draws from a PPP loan and thereby delay the start date of the eight-week covered period; and (ii) lenders must electronically upload SBA Form 1502 indicating that PPP loan funds have been disbursed within 20 calendar days after a PPP loan is approved or, for loans approved before availability of the updated SBA Form 1502 reporting process, by May 18, 2020.
Treasury Updates Interim Final Rule for Additional Criterion for Eligibility of Seasonal Employers under the Paycheck Protection Program
April 28, 2020
The U.S. Department of the Treasury updated the Interim Final Rule addressing additional criterion for seasonal employers under the Paycheck Protection Program to clarify that in evaluating eligibility, a seasonal business will be considered to have been in operation as of February 15, 2020, if the business was in operation for any eight-week period between May 1, 2019 and September 15, 2019.
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. House of Representatives
Committee on Small Business
Chairs Velázquez and Grijalva: Paycheck Protection Program Loan Distribution Must be Equitable for Small Businesses in U.S. Territories
April 29, 2020
House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) and House Natural Resources Committee Chairman Raúl M. Grijalva (D-AZ) wrote a letter to the U.S. Department of the Treasury and Small Business Administration on disparities that have emerged in the allocation of Paycheck Protection Program (PPP) loans in the U.S. territories. The lawmakers request more information to ensure that underserved businesses in the U.S. territories receive equitable access to the PPP.
Federal Agencies
Department of the Treasury
Joint Statement by Treasury Secretary Mnuchin and SBA Administrator Carranza on Establishing Dedicated Hours for Small Lender Submissions of Paycheck Protection Program Applications
April 29, 2020
U.S. Treasury Secretary Steven T. Mnuchin and Small Business Administration (SBA) Administrator Jovita Carranza issued a statement on the Paycheck Protection Program (PPP). In the statement, Secretary Mnuchin and Ms. Carranza note that, from 4:00 p.m. Eastern time through 11:59 p.m. Eastern time on April 29, 2020, the SBA will only accept loans from lending institutions with asset sizes less than $1 billion. The reserved processing time was set-up in order to allow special access to the PPP for the smallest lenders and their small business customers.
Federal Reserve Board
Federal Reserve Issues Federal Open Market Committee (FOMC) Statement
April 29, 2020
The Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The FOMC expects to maintain its target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
Federal Reserve Bank of Boston
Boston Fed Creates Guide for Small Businesses Seeking Paycheck Protection Program Loans
April 29, 2020
The Federal Reserve Bank of Boston has released a guide to help steer small businesses through the second round of Paycheck Protection Program (PPP) funding. The information includes a resource page on bostonfed.org with information on program eligibility and the application process, a curated list of technical assistance providers, and a registry of lenders with the capacity to process the PPP’s loans for non-customers.
Consumer Financial Protection Bureau
CFPB Provides Flexibility During COVID-19 Pandemic
April 29, 2020
The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule clarifying that consumers can exercise their rights to modify or waive certain required waiting periods under the TILA-RESPA Integrated Disclosure Rule and Regulation Z rescission rules. The CFPB also issued FAQs that address when creditors must provide appraisals or other written valuations to mortgage applicants in order to expedite access to credit for consumers affected by the COVID-19 pandemic.
Freddie Mac
Multifamily Securitization Forbearance Report
April 29, 2020
Freddie Mac recently implemented a forbearance relief plan in response to the COVID-19 pandemic that allows qualifying multifamily borrowers to defer up to three months of mortgage payments. Freddie Mac has released a forbearance report that provides an overview of the program as of April 13, 2020.
Department of Labor
U.S. Department of Labor Announces that all 50 States and the District of Columbia Are Paying Federal Pandemic Unemployment Compensation Benefits
April 29, 2020
The U.S. Department of Labor announced that the Federal Pandemic Unemployment Compensation’s (FPUC) weekly unemployment compensation boost is now being paid to eligible individuals in all 50 states and the District of Columbia. FPUC is authorized under Section 2104 of the CARES Act, and provides an additional $600 weekly payment to certain eligible individuals who are receiving other benefits.
International
European Commission
Western Balkans’ Leaders Meeting: EU Reinforces Support to Address COVID-19 Crisis and Outlines Proposal for Post-Pandemic Recovery
April 29, 2020
The European Commission announced more than €3.3 billion of EU financial support with the European Investment Bank to the benefit of the Western Balkans’ citizens. The package aims to address the immediate health and resulting humanitarian needs of the COVID-19 pandemic and help with social and economic recovery.
UK Financial Conduct Authority
Further Statement from the Working Group on Sterling Risk-Free Reference Rates (RFRWG) on the Impact of Coronavirus on the Timeline for Firms’ LIBOR Transition Plans
April 29, 2020
The Financial Conduct Authority (FCA), Bank of England and Working Group on Sterling Risk-Free Reference Rates (RFRWG), announced that it will not be feasible to complete transition away from LIBOR across all new sterling LIBOR linked loans by the original end-Q3 2020 target. The RFRWG recommends that: (i) by the end of Q3 2020 lenders should be in a position to offer non-LIBOR linked products to their customers; (ii) after the end of Q3 2020 lenders, working with their borrowers, should include clear contractual arrangements in all new and re-financed LIBOR-referencing loan products to facilitate conversion ahead of end-2021, through pre-agreed conversion terms or an agreed process for renegotiation, to SONIA or other alternatives; and (iii) all new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021.