PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Thursday, July 2, 2020
July 02, 2020
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Major Developments
Senate and House Pass Paycheck Protection Program Extension
July 1, 2020
The bill extends the program through August 8.
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.
U.S. Senate
Committee on Small Business and Entrepreneurship
Cardin, Schumer, Shaheen, Coons and Rosen Laud Unanimous Senate Passage of Legislation to Extend PPP Loan Application Deadline
June 30, 2020
U.S. Senate Committee on Small Business & Entrepreneurship Ranking Member Ben Cardin (D-MD), Senate Democratic Leader Chuck Schumer (NY), and Senators Jeanne Shaheen (D-NH), Chris Coons (D-DE), Jacky Rosen (D-NV.) and Susan Collins (R-ME) passed legislation to extend the Small Business Administration’s (SBA’s) authority to approve Paycheck Protection Program (PPP) loans through August 8, 2020.
U.S. House of Representatives
Committee on Financial Services
Chairwoman Waters Announces July Hearing Schedule
July 1, 2020
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced the following virtual hearings in the month of July:
(i) July 7 at 12:00 pm (Eastern) - The Subcommittee on National Security, International Development and Monetary Policy will convene for a hearing entitled, “Paycheck Security: Economic Perspectives on Alternative Approaches to Protecting Workers’ Pay during COVID-19.”
(ii) July 8 at 12:00 pm (Eastern) - The Task Force on Artificial Intelligence will convene for a hearing entitled, “Exposure Notification and Contact Tracing: How AI Helps Localities Reopen and Researchers Find a Cure.”
(iii) July 9 at 12:00 pm (Eastern) - The Subcommittee on Diversity and Inclusion will convene for a hearing entitled, “Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and Financial Services during the Pandemic.”
(iv) July 14 at 12:00 pm (Eastern) - The Subcommittee on Investor Protection, Entrepreneurship and Capital Markets will convene for a hearing entitled, “Promoting Economic Recovery: Examining Capital Markets and Worker Protections in the COVID-19 Era.”
(v) July 16 at 12:00 pm (Eastern) - The Subcommittee on Oversight and Investigations will convene for a hearing entitled, “Protecting Homeowners during the Pandemic: Oversight of Mortgage Servicers’ Implementation of the CARES Act.”
Committee on Small Business
Velázquez Conducts Oversight of SBA Office Overseeing COVID-19 Relief EIDL Program
July 1, 2020
The House Small Business Committee (Committee) under Chairwoman Nydia M. Velázquez (D-NY) heard testimony from the head of the Small Business Administration’s (SBA) Office of Disaster Assistance (ODA). ODA has been responsible for the administration of COVID-19 relief loans through the Economic Injury Disaster Loan (EIDL) program. The Committee has heard from small businesses across the country that have experienced obstacles to obtaining relief through the EIDL program. At a June hearing, entrepreneurs described their experiences with the EIDL program, which included poor communication from SBA, slow processing times, and a lack of information regarding application status. The Committee reviewed these issues as well as the structure of ODA and their procedure for processing EIDL loans.
Federal Agencies
Department of the Treasury
Treasury to Provide Loan under Title IV of the CARES Act to a National Security Firm
July 1, 2020
The U.S. Department of the Treasury (Treasury) announced that it intends to make a $700 million loan to YRC Worldwide Inc. (YRC), and that it had reached an agreement with YRC on June 30, 2020, to receive a 29.6% equity stake in YRC in connection with the loan under the CARES Act. Treasury’s determination was based on a certification by the Secretary of Defense that YRC is critical to maintaining national security. YRC is a leading provider of critical military transportation and other hauling services to the U.S. government and provides significant truckload services to the Department of Defense.
Federal Reserve Bank of Boston
Q2 2020: Snapshot of the New England Economy through June 22, 2020
July 1, 2020
The Federal Reserve Bank of Boston issued a report titled “Q2 2020: Snapshot of the New England Economy through June 22, 2020.” The report notes that through May 2020, both the New England region and the U.S. experienced sharp declines in economic conditions relative to the first months of 2020, trends impacted by the late winter arrival of the Coronavirus and resultant policy actions that closed businesses and required residents to stay at home to support public health. Payroll employment dropped and unemployment rates have risen dramatically relative to one year prior, though the May 2020 rates have improved relative to April 2020.
Predicting Unemployment in the Pandemic
July 1, 2020
In a report issued for the Federal Reserve Bank of Boston’s Research department, New England Public Policy Center Senior Economist Osborne Jackson examines the regional labor market effects of an economic shock. The analysis focuses on his predictions for layoffs and unemployment in New England and the rest of the country in the second quarter of 2020, when the COVID-19 pandemic took hold.
Department of Housing and Urban Development/Federal Housing Administration
COVID-19 Fraud Bulletin: Loan Modification and Foreclosure Rescue Schemes
July 1, 2020
The Officer of the Inspector General of the U.S. Department of Housing and Urban Development released a COVID-19 fraud bulletin that outlines potential loan modification and foreclosure rescue schemes that homeowners may face and tips to avoid falling victim to such schemes.
Ginnie Mae
APM 20-07: Temporary Pooling Restrictions on Re-performing Loans Following Relief and Loss Mitigation
June 29, 2020
Ginnie Mae released an all-participant memorandum discussing temporary pooling restrictions on re-performing loans. The memorandum notes that Ginnie Mae seeks to ensure that transactional activity related to borrower relief and loss mitigation options made available by the federal mortgage programs not impair market confidence in Ginnie Mae securities. Two borrower relief options, the Federal Housing Administration’s National Emergency Standalone Partial Claim and the United States Department of Agriculture’s Mortgage Recovery Advance, do not require that loans be bought out of pools in cases where the terms of the loan will not need to be modified. To ensure that loan buyout activity is aligned with borrower and Mortgage Backed Security program interests, Ginnie Mae is implementing certain pooling eligibility restrictions while continuing to provide for buyout transactions that are appropriate and necessary.
International
Bank of England
Remarks by Jonathan Haskel on COVID-19 and Monetary Policy
July 1, 2020
Jonathan Haskel, External Member of the Monetary Policy Committee of the Bank of England (BoE) examines the impact of COVID-19 on the UK’s economy and BoE’s monetary policy response to it. He also discusses how COVID-19 could affect future employee working arrangements.
Statement on Bank’s Commitment to Combatting Climate Change
July 1, 2020
The Bank of England sets out its position on climate change in relation to the COVID-19 crisis.
UK Financial Conduct Authority
Building a Financial Regulatory System Suitable for the UK in the New Era
July 1, 2020
Nausicaa Delfas, Executive Director of International, delivered a speech on building a financial regulatory system suitable for the UK in the new era defined by developments brought about by Brexit, COVID-19 and technological and societal changes.
FCA Confirms Further Support for Consumer Credit Customers Facing Difficulties Due to COVID-19
July 1, 2020
The Financial Conduct Authority has confirmed the support users of certain consumer credit products will receive if they are still experiencing temporary payment difficulties due to COVID-19. The measures outline the options firms will provide credit card and other revolving credit (store card and catalogue credit) and personal loan customers who are coming to the end of a payment freeze and for customers who have agreed an arranged interest-free overdraft of up to £500. Customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500, will have until October 31, 2020 to apply for one.
FCA Gives Update on Banks’ Overdraft Pricing Decisions and Plans to Support Consumers During COVID-19 Pandemic
July 1, 2020
The Financial Conduct Authority (FCA) provided an update on banks’ overdraft pricing decisions and plans to support consumers. The FCA’s work on overdrafts found that fees paid for unarranged overdrafts were regularly 10 times as high as fees for payday loans. The FCA’s view was that new rules were needed to address both how much the most vulnerable were being charged for unarranged overdrafts, and the level of fees and charges that many arranged overdraft customers were paying on top of interest rates.