PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Wednesday, April 29, 2020
April 29, 2020
FedACTion Task Force
PH Client Alerts
Click here to read more from our Coronavirus series.
Major Developments
Treasury Releases Interim Final Rule on Additional Criteria for Eligibility of Seasonal Employers under the Paycheck Protection Program
April 27, 2020
The U.S. Department of the Treasury, through an Interim Final Rule, authorizes lenders eligible to originate loans under the SBA’s Paycheck Protection Program (PPP) to use an alternative criterion for calculating the maximum loan amount for PPP loans issued to seasonal employers. The Interim Final Rule provides a seasonal employer the option of using any consecutive 12-week period between May 1, 2019 and September 15, 2019 for determining its maximum loan amount under the PPP.
Federal Reserve Board Announces an Expansion of the Scope and Duration of the Municipal Liquidity Facility
April 27, 2020
The Federal Reserve Board announced an expansion of the scope and duration of the Municipal Liquidity Facility (MLF). The MLF, which was announced on April 9, 2020, will offer up to $500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic. Updates to the MLF include extending the duration of eligible bonds to 36 months up from 24 months, expanding the scope of the MLF to cover counties with populations of at least 500,000 residents, down from 2 million, and cities of 250,000 residents, down from 1 million. Finally, whereas previously only pricing was tied to an eligible issuer’s rating, an eligible issuer now must have been rated at least investment grade as of April 8, 2020 to be eligible to participate in the MLF.
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 Financial Services
Chairwoman Waters and Democratic Leaders Call on Treasury, Small Business Administration to Expand Paycheck Protection Program Opportunities for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs)
April 26, 2020
House Financial Services Committee Chairwoman Maxine Waters (D-CA) joined with House Speaker Nancy Pelosi (D-CA), Senate Democratic Leader Charles Schumer (D-NY), House Small Business Committee Chairwoman Nydia Velázquez (D-NY), Senate Small Business and Entrepreneurship Committee Ranking Member Benjamin Cardin (D-MD), and Housing and Urban Affairs Committee Ranking Member Sherrod Brown (D-OH), in sending a letter to U.S. Treasury Secretary Steven T. Mnuchin and U.S. Small Business Administration (SBA) Administrator Jovita Carranza regarding the implementation of the Paycheck Protection Program (PPP) and Health Care Enhancement Act. In the letter, the lawmakers lay out their expectations for the implementation of key COVID-19 response programs, including the PPP, Emergency Economic Injury Disaster Loan (EIDL) program, and Emergency EIDL grant program. The lawmakers request that the SBA and Treasury set aside at least $10 billion for MDIs and CDFIs to make PPP loans and ensure that non-depository CDFIs do not have to re-verify information of existing customers if they have an ongoing financial relationship with the customer that is well documented.
Federal Agencies
Federal Reserve Board
Agencies Extend Comment Period on Updates to Resolution Plan Guidance for Large Foreign Banks in Light of COVID-19 Challenges
April 27, 2020
The Federal Deposit Insurance Corporation and the Federal Reserve Board announced a 30-day extension to the comment period for the agencies’ proposed guidance for resolution plans submitted by certain large foreign banks. The extension will allow interested parties additional time to analyze the issues and to prepare comments through June 4, 2020. The agencies also noted they are reviewing and may adjust other upcoming deadlines associated with the resolution planning process.
Federal Reserve Bank of New York
New York Fed Releases FAQ on Municipal Liquidity Facility
April 27, 2020
The Federal Reserve released Frequently Asked Questions (FAQs) concerning the Municipal Liquidity Facility.
Securities and Exchange Commission
SEC Announces Investor Advisory Committee Meeting Focusing on COVID-19
April 27, 2020
The Securities and Exchange Commission’s (SEC) Investor Advisory Committee will hold a public meeting at 2 p.m. Eastern time on May 4, 2020, by remote means. The SEC will hold two discussions: a discussion of public company disclosure considerations in a COVID-19 pandemic context; and a discussion of public company shareholder engagement/virtual shareholder meetings in a COVID-19 pandemic context.
Consumer Financial Protection Bureau
Statement on Supervisory and Enforcement Practices Regarding Certain Filing Requirements Under the Interstate Land Sales Full Disclosure Act and Regulation J
April 27, 2020
The Consumer Financial Protection Bureau (CFPB) has released a statement that it recognizes the impact the COVID-19 pandemic is having on consumers and on the operations of many entities, including land developers who are subject to the Interstate Land Sales Full Disclosure Act. The CFPB seeks to provide land developers with flexibility and reduce administrative burden. The statement notes that the CFPB does not intend to take supervisory or enforcement action against developers for delays in filing annual reports of activity and (ii) delays in filing financial statements with the CFPB, provided that developers are making good faith efforts to file the reports within a reasonable period of time.
National Credit Union Association
Mentoring Grants Available to Help Minority Depository Institutions
April 27, 2020
The National Credit Union Association (NCUA) announced that small, low-income credit unions designated as Minority Depository Institutions can apply for mentoring grants from May 1, 2020 through June 30, 2020. The NCUA’s Office of Credit Union Resources and Expansion will make grants of up to $25,000 available to help small institutions establish mentoring programs with larger, low-income-designated credit unions that can provide expertise and guidance in serving low-income and underserved populations. Credit unions selected for the mentoring program will participate in NCUA-led group meetings and training relevant to their needs and will share progress on the mentoring partnerships.
Credit Unions Are Strong, but COVID-19 Presents Challenges
April 27, 2020
National Credit Union Association (NCUA) Board Member Todd M. Harper gave remarks during the Mountain West Credit Union Association’s Annual Meeting on April 23, 2020. He noted that federally insured credit unions were strong at the start of the COVID-19 pandemic but signaled they may face a more difficult environment than they ever have. Mr. Harper outlined his five priorities for congressional action, which he said would better equip the NCUA to contain the pandemic’s economic impact.
Department of Housing and Urban Development/Federal Housing Administration
Federal Housing Finance Agency
Lump Sum Repayment is Not Required in Forbearance
April 27, 2020
The Federal Housing Finance Agency (FHFA) advised that borrowers in forbearance with a Fannie Mae or Freddie Mac-backed mortgage are not required to repay the missed payments in one lump sum. For those borrowers who opt for forbearance, their mortgage servicer will contact them approximately 30 days before the end of the forbearance plan to see if the temporary hardship has been resolved and discuss a variety of options, including continued forbearance or a repayment plan.
Department of Education
Secretary DeVos Launches New Grant Competition to Spark Student-Centered, Agile Learning Opportunities to Support Recovery from National Emergency
April 27, 2020
U.S. Secretary of Education Betsy DeVos announced that more than $300 million in discretionary grant funds will be available for states to use to create adaptable, innovative learning opportunities for K-12 and postsecondary learners in response to the COVID-19 national emergency.
International
European Commission
Coronavirus: Commission Receives First Preliminary Application for Support from the EU Solidarity Fund for Health Emergency from Italy
April 27, 2020
The European Commission (Commission) received its first preliminary application for financial support from the EU Solidarity Fund from Italy to address the coronavirus outbreak and its effects. Italy is expected to submit further details in the weeks to come. Since April 1, 2020, following the Commission’s proposal for a Coronavirus Response Investment Initiative, EU Member States can apply for support from the EU Solidarity Fund for health emergency reasons. The Commission will collect all coronavirus-related applications until June 24, 2020 and then assess them in a package in order to ensure an equitable treatment of all cases. It will then submit a proposal for financial aid to the European Parliament and the Council.
HM Treasury
Small businesses Boosted by Bounce Back Loans
April 27, 2020
Small businesses will benefit from a new fast-track finance scheme providing loans of up to £50,000 with a 100% government-backed guarantee for lenders, the Chancellor of the Exchequer announced. The scheme has been designed to ensure that small firms who need vital cash injections to keep operating can get finance in a matter of days, and comes alongside the £6 billion awarded in business grants, supporting approximately four million jobs through the job retention scheme and tax deferrals supporting hundreds of thousands of firms.
Bank of England Prudential Regulatory Authority
Statement on the Regulatory Treatment of the UK Coronavirus Business Interruption Loan Scheme (CBILS) and the UK Coronavirus Large Business Interruption Loan Scheme (CLBILS)
April 27, 2020
HM Treasury has announced changes to the UK COVID-19 business interruption loan schemes. The Bank of England Prudential Regulatory Authority’s (PRA) statement complements the government’s announcement, and sets out the PRA’s observations on whether the guarantees provided by the Secretary of State for Business, Energy and Industrial Strategy under the UK Coronavirus Business Interruption Loan Scheme and the UK Coronavirus Large Business Interruption Loan Scheme are eligible for recognition as unfunded credit risk mitigation under the Capital Requirement Regulation.
UK Financial Conduct Authority
Statement on the UK Coronavirus Business Interruption Loan Scheme (CBILS) and the New Bounce Back Loan Scheme (BBL)
April 27, 2020
HM Treasury has announced amendments to the UK’s Coronavirus Business Interruption Loan Scheme (CBILS) to support small businesses. The statement sets out the Financial Conduct Authority’s approach to its regulation of firms in relation to the CBILS and Bounce Back Loan schemes.