PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Tuesday, June 16, 2020
June 16, 2020
FedACTion Task Force
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Major Developments
Federal Reserve’s Main Street Lending Program Opens for Lender Registration
June 15, 2020
The Federal Reserve Bank of Boston announced that the Board of Governors of the Federal Reserve System’s Main Street Lending Program (Program) opened for lender registration. Eligible lenders can locate the necessary registration documents on the Program site and register through the Program’s lender portal, through which lenders will provide relevant identifying information, and sign and submit required registration forms and agreements. Thereafter, eligible Main Street Program loans can now be extended.
Federal Reserve Board Announces It Will Be Seeking Public Feedback on Proposal to Expand Its Main Street Lending Program to Provide Access to Credit for Nonprofit Organizations
June 15, 2020
The Board of Governors of the Federal Reserve System also announced it will be seeking public feedback on a proposal to expand its Main Street Lending Program (Program) to provide access to credit for nonprofit organizations. The proposed expansion would offer loans to small and medium-sized nonprofit organizations that were in sound financial condition before the coronavirus pandemic. Loan terms for nonprofit loans, including the interest rate, deferral of principal and interest payments, and five-year term, are the same as for existing Program loans. The minimum loan size is $250,000 and the maximum loan size is $300 million. Other requirements include:
Minimum of 50 and maximum of 15,000 employees;
Financial thresholds based on operating performance, liquidity and ability to repay debt;
An operational history of at least five years; and
A limit on endowments of no more than $3 billion.
Additionally, each organization must be a tax-exempt organization under section 501(c)(3) or 501(c)(19) of the Internal Revenue Code. Comments may be submitted via email to the link below until Monday, June 22.
New York Fed Releases Updated FAQs and Documents for the Term Asset-Backed Securities Loan Facility
June 15, 2020
The Federal Reserve Bank of New York (FRBNY) has released updated Frequently Asked Questions for the Term Asset-Backed Securities Loan Facility (TALF), along with an updated Form of Issuer and Sponsor Certification as to TALF Eligibility for ABS and an updated FRBNY Borrower Due Diligence Policy for TALF Agents.
SBA’s Economic Injury Disaster Loans and Advance Program Reopened to All Eligible Small Businesses and Non-Profits Impacted by COVID-19 Pandemic
June 15, 2020
The U.S. Small Business Administration announced that it has reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible applicants.
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
Senators Cardin, Portman, Booker and Lankford Issue Statement on Administration’s Updated Rules on PPP Eligibility for Justice-Involved Entrepreneurs
June 15, 2020
Ranking Member of the Senate Small Business & Entrepreneurship Committee Ben Cardin (D-MD) and Senators Rob Portman (R-OH), Cory Booker (D-NJ), and James Lankford (R-OK) released a statement after the U.S. Small Business Administration and the U.S. Department of the Treasury announced updated rules with regard to past criminal justice involvement and eligibility for the Paycheck Protection Program (PPP). The new rule reduces the timeframe for the exclusion of justice-involved small business owners in the PPP from five years to one year for felonies that do not involve fraud, bribery, embezzlement, or a false statement in a loan or federal assistance application. The Senators raised concerns that entrepreneurs with prior felonies unrelated to financial crimes are ineligible borrowers, and that individuals who have not yet had their day in court are not being given a presumption of innocence, thereby denying certain small business owners and their employees the ability to secure job-saving PPP loans.
U.S. House of Representatives
Committee on Financial Services
Following the Trump Administration’s Refusal to Release Names of PPP Loan Recipients, Congresswomen Waters and Velázquez and Congressman Neal Demand Transparency: “Taxpayers Have a Right to Know How Their Money Was Spent”
June 15, 2020
Following the Trump Administration’s decision not to release the names of companies that received funding through the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP), Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, Congressman Richard E. Neal (D-MA), Chairman of the House Committee on Ways and Means, and Congresswoman Nydia M. Velázquez (D-NY), Chairwoman of the House Committee on Small Business, reminded the U.S. Department of the Treasury (Treasury) and the SBA of their duty to be transparent and accountable. Given the shared responsibility the Committees have to conduct oversight of Treasury and the SBA, the Committee Chairs requested the names of all recipients of PPP loans, the dollar amount of all loans received, as well as the names of all applicants that did not receive PPP loans.
Federal Agencies
Federal Reserve Board
Federal Reserve Board Announces Updates to Secondary Market Corporate Credit Facility
June 15, 2020
The Board of Governors of the Federal Reserve System (FRB) and the Federal Reserve Bank of New York announced updates to the Secondary Market Corporate Credit Facility (SMCCF), which will begin buying corporate bonds in the secondary market, thereby supporting market liquidity. The SMCCF is scheduled to purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds through September 30, 2020, unless the facility is extended by the FRB.
Federal Reserve Board Announces It Will Resume Examination Activities for All Banks, after Previously Announcing a Reduced Focus on Exam Activity in Light of the Coronavirus Response
June 15, 2020
The Board of Governors of the Federal Reserve System (FRB) announced that it will resume examination activities for all banks, after previously announcing a reduced focus on exam activity in light of the coronavirus response. The FRB anticipates that exams will continue to be conducted offsite until conditions improve and will continue to work with banks to understand any specific issues they may be facing.
Federal Reserve Bank of New York
New York Fed Releases Article on Distribution of Spread of COVID-19
June 15, 2020
As part of its Liberty Street Economics web series, the Federal Reserve Bank of New York posted an article about how the spread of COVID-19 across the U.S. varied by geography, race, income and population density.
Federal Deposit Insurance Corporation
Revisions to the Consolidated Reports of Condition and Income (Call Report) and the FFIEC 101 Report to Reflect COVID-19 Related Regulations
June 12, 2020
The Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency have requested and received emergency approval from the U.S. Office of Management and Budget for certain revisions to the three versions of the Call Report and the Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework, effective as of the June 30, 2020 report date. The revisions resulted from several Interim Final Rules (IFRs) and a Notice of Proposed Rulemaking (NPR) issued by one or all of such agencies in response to the impact on the financial markets and the strains on the U.S. economy as a result of COVID-19. The revisions also resulted from certain provisions of the CARES Act. The IFRs and NPR were published in the Federal Register from March through June of 2020.
2Q2020 COVID-19 Related Supplemental Instructions (Call Report)
2Q2020 COVID-19 Related Supplemental Instructions (FFIEC 101)
Fannie Mae
U.S. Economic Growth Expectations Largely Unchanged as Lockdown Restrictions Ease
June 15, 2020
Despite substantial revisions to the components constituting real GDP, headline growth expectations on a quarterly and full-year basis were only slightly changed compared to last month, according to the latest commentary from the Fannie Mae Economic and Strategic Research (ESR) Group. The ESR Group now expects second quarter 2020 real GDP to fall 37.0% annualized, compared to the 36.6% decline predicted last month, and full-year 2020 GDP of negative 5.4%, one-tenth lower than the prior forecast of negative 5.3%. Its forecast for full-year 2021 growth, however, improved by one-tenth to 5.3%. The revisions to the underlying components reflect expectations that consumer spending and fixed investment will be stronger than previously forecast but largely offset by weaker net exports and business inventories. Risks to the ESR Group’s macroeconomic forecast are largely balanced, with upside risks including an even faster rebound in consumer spending than currently expected, while a sustained resurgence or second wave of COVID-19 following the recent easing of lockdown restrictions remains the greatest downside risk.
International
European Commission
Coronavirus: European Commission Backs International Initiative to Facilitate Trade in Healthcare Products
June 15, 2020
Following a first discussion among EU ministers, Commissioner for Trade Phil Hogan shared the European Commission's ideas for an international initiative to facilitate trade in healthcare products with a group of World Trade Organization (WTO) partners. The ideas address the ongoing international discussion on how to facilitate access to affordable pharmaceutical and medical goods and avoid trade disruptions in times of crisis, and could form part of an international agreement open to all WTO members.
Bank of England
Payments after the COVID-19 Crisis – Emerging Issues and Challenges
June 15, 2020
Christina Segal-Knowles, Executive Director of the Financial Market Infrastructure Directorate at the Bank of England, gave a speech about changes to the way people pay for goods and services and the impact of COVID-19. She also discusses the role of digital currencies and what central banks can and are doing in response to this innovation.