S&C FINANCIAL SERVICES CORONAVIRUS DEVELOPMENTS

March 25, 2020

Our Coronavirus Resource Page is being continuously updated with the latest legal analysis, memos and podcasts related to COVID-19.
 
August 12, 2020
FED ANNOUNCES REVISED PRICING FOR ITS MUNICIPAL LIQUIDITY FACILITY
 
The Fed revised the pricing for its Municipal Liquidity Facility (MLF) by reducing (1) the interest rate spread on tax-exempt notes for each credit rating category by 50 basis points and (2) the amount by which the interest rate for taxable notes is adjusted relative to tax-exempt notes. 
 


August 12, 2020
SBA RELEASES UPDATED PPP/FORGIVENESS FAQS, IFR ON APPEALS OF SBA LOAN REVIEW DECISIONS, AND APPROVALS REPORT
 
The SBA published updated FAQs regarding Paycheck Protection Program (PPP) loans and PPP loan forgiveness.  In addition, the SBA released an interim final rule addressing the process for a PPP borrower to appeal certain SBA loan review decisions to the SBA Office of Hearings and Appeals.  The SBA also released a report providing summary information regarding PPP loans approved through Aug. 8, 2020.
 


August 11, 2020
FED SUBMITS PERIODIC REPORT TO CONGRESS ON LENDING FACILITIES
 
The Fed submitted a report to Congress on the Primary Dealer Credit Facility, the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility (SMCCF), the Term Asset-Backed Securities Loan Facility (TALF), the MLF, the PPP Liquidity Facility (PPPLF), and the Main Street Lending Program.  The report provides an update on the outstanding amounts of these facilities as of July 31, 2020.  In addition, the Fed published transaction-specific disclosures relating to the Main Street New Loan Facility, the Main Street Priority Loan Facility, SMCCF, TALF, MLF, and PPPLF
 


August 10, 2020
SBC CHAIRMAN AND HFSC RANKING MEMBER SEND LETTER TO FED AND TREASURY ON UTILIZATION OF REMAINING ESF FUNDS
 
Senate Banking Committee Chairman Crapo (R-ID) and House Financial Services Committee Ranking Minority Member McHenry (R-NC) sent a letter to Fed Chairman Powell and Treasury Secretary Mnuchin urging the agencies to “utilize the remaining funds in the Exchange Stabilization Fund (ESF) to [their] fullest extent.”  Arguing that the “purpose of the ESF is to provide the Treasury Department and the [Fed] maximum discretion to expand MSLP and support more businesses,” they stress that the agencies “should do more with the ESF and the MSLP to provide support to Main Street businesses, their workers, and our American economy.” 
 


August 8, 2020
PRESIDENT TRUMP ISSUES MEMORANDA ON PAYROLL TAX OBLIGATIONS, STUDENT LOAN PYMNT RELIEF AND UNEMPLOYMENT BENEFITS
 
President Trump issued three memoranda on: (1) deferring payroll tax obligations, directing the Treasury Secretary to “defer the withholding, deposit, and payment” of payroll taxes on wages paid during the period of Sept. 1, 2020 through Dec. 31, 2020; (2) student loan payment relief, extending the temporary relief of payments and the waiver of all interest on student loans held by the Department of Education until Dec. 31, 2020; and (3) unemployment benefits, authorizing up to $44 billion in benefits.
 


August 8, 2020
PRESIDENT TRUMP ISSUES AN EXECUTIVE ORDER INTENDED TO PROVIDE ASSISTANCE TO RENTERS AND HOMEOWNERS
 
President Trump also issued an executive order intended to provide assistance to renters and homeowners.  The order instructs Treasury and HUD to “identify any and all available Federal funds to provide temporary financial assistance to renters and homeowners who, as a result of the financial hardships caused by COVID-19, are struggling to meet their monthly rental or mortgage obligations.”
 


August 6, 2020
FED REPORT AND DISCLOSURES ON MSLP FACILITIES
 
The Fed submitted a periodic report to Congress on the Main Street Lending Program (MSLP) facilities, noting that, as of July 27, 2020, the total outstanding amount of the Fed’s loans to the program’s special purpose vehicle was $76,855,000 and providing transaction-specific disclosures.
 


August 5, 2020
RUBIO, COLLINS URGE COLLEAGUES TO PASS SMALL BUSINESS RELIEF AMENDMENTS
 
Senators Rubio (R-FL) and Collins (R-ME) filed two amendments to S. 178, which are similar to the small business relief provisions of the Senate GOP “HEALS Act” proposal.  Specifically, the amendments would, among other measures: (1) “create a second draw of PPP for businesses with 300 or fewer employees with a 35 percent revenue decline” (down from 50% in the original proposal); and (2) establish a “new long-term recovery loan program . . . [to] provide working capital to industries that have been hardest hit by the COVID-19 pandemic.”
 


August 4, 2020
SBA RELEASES FAQS ON PPP LOAN FORGIVENESS
 
The SBA, in consultation with Treasury, released FAQs on Paycheck Protection Program (PPP) loan forgiveness, which address the forgiveness of payroll and nonpayroll expenses, as well as circumstances in which borrowers may be subject to a loan forgiveness reduction.
 


August 4, 2020
ATTORNEY GENERAL BECERRA REMINDS MORTGAGE SERVICERS OF THEIR OBLIGATIONS TO CALIFORNIA HOMEOWNERS DURING COVID-19 PANDEMIC
 
California Attorney General Becerra sent a letter to 33 mortgage servicers “reminding the companies of their obligations to California homeowners and tenants under the Homeowner Bill of Rights” and noting that his office “may investigate and bring enforcement actions on behalf of the People of the State of California for violations” of such protections.
 


August 4, 2020
OCC ISSUES RULE CREATING EXCEPTION TO WITHDRAWAL PERIOD REQUIREMENT FOR COLLECTIVE INVESTMENT FUNDS, EASES IMPACT OF COVID-19
 
The OCC issued an interim final rule (IFR) amending its requirements governing the administration of collective investment funds (CIFs) “invested primarily in real estate or other assets that are not readily marketable” and codifying the time a bank generally has for withdrawing accounts from those CIFs.  The IFR also establishes an exception allowing a bank to extend the withdrawal period, “provided that certain conditions are met,” enabling banks to “preserve the value of CIF assets for the benefit of fund participants during unanticipated and severe market conditions,” such as those resulting from COVID-19.  The IFR will become effective upon its publication in the Federal Register.
 


August 4, 2020
SIGPR ISSUES INITIAL REPORT TO CONGRESS
 
The Special Inspector General for Pandemic Recovery (SIGPR) submitted its inaugural report to Congress summarizing the office’s oversight activities relating to Treasury’s loan programs and investments under Division A of the CARES Act and presenting SIGPR’s “best, objective understanding of the jurisdictional contours for each of the entities assigned a major oversight role by the . . . Act,” as well as several recommendations.  
 


August 4, 2020
SBC CHAIRMAN CRAPO FILES AMENDMENT WITH POTENTIAL PHASE IV BANKING PROVISIONS
 
Senate Banking Committee Chairman Crapo (R-ID) filed an amendment to S. 178, the legislative vehicle for a potential “Phase IV” stimulus measure, containing several banking-related provisions.  The COVID-19 “Phase IV” package is currently the subject of ongoing bipartisan, bicameral, and inter-branch negotiations.  The amendment would provide that, when making “loans, loan guarantees, and other investments” under Title IV, subsection (b)(4) of the CARES Act, the Treasury Secretary “shall prioritize the provision of credit and liquidity to assist eligible businesses, States and municipalities, even if [he] estimates that such loans, loan guarantees, or investments may incur losses.”  Notably, the amendment would also modify section 171 of the Dodd-Frank Act (the so-called “Collins Amendment”) by granting the Federal banking agencies the “authority, by rule or order, to make . . . temporary adjustments to the method of calculating the generally applicable leverage capital requirements or other leverage requirement” of an insured depository institution (IDI), a depository institution holding company or a nonbank financial company supervised by the Fed “for purposes of compliance with . . . section [171] as the appropriate Federal banking agency determines necessary to address or avoid a severe economic stress situation.”  In addition, the amendment would extend the application of certain temporary regulatory relief provisions in the CARES Act relating to: (1) the Community Bank Leverage Ratio to Dec. 31, 2021; (2) troubled debt restructurings to Jan. 1, 2022; and (3) the current expected credit losses (CECL) accounting methodology to Jan. 1, 2023.  Further, the amendment would expand the eligibility for the CECL-related relief to all persons subject to the standard (including insurance companies and other non-bank financial companies).
 


August 3, 2020
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ISSUES STATEMENT ON ADDITIONAL LOAN ACCOMMODATIONS RELATED TO COVID-19
 
The FFIEC issued a statement outlining “prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers as initial [COVID]-related loan accommodation periods come to an end and they consider additional accommodations.”
 


July 23, 2020
HOUSE PASSES H.R. 6395, SENATE PASSES S. 4049, THE FY 2020 NDAA
 
The House adopted, by a vote of 296 to 125, H.R. 6395, the FY 2021 National Defense Authorization Act (NDAA), legislation that would provide appropriations for the military activities of the Department of Defense and military construction for FY 2021.  Notably, the measure, as amended, would also: (1) extend certain CARES Act “student loan protections [to] private student loan borrowers,” including a “pause in borrower payment obligations, accrual of interest, negative credit reporting, and debt collection,” until Sept. 30, 2021; and (2) allocate up to $10,000 “in immediate assistance to pay down the balance of private student loans.”  Prior to the House vote, the White House issued a Statement of Administration Policy relaying the Administration’s opposition to certain sections of the measure and noting that, if H.R. 6395 were to reach the President’s desk, his senior advisors would recommend a veto.  The Senate also passed, by a vote of 86 to 14, S. 4049, its version of the FY 2021 NDAA, which does not include corresponding provisions relating to private student loans.  As both chambers would be charged with reconciling the differences between these two bills, it is unclear whether the student loan provisions will be included in a final measure, which may be subject to additional votes by the House and Senate. 


July 23, 2020
FEDERAL RESERVE BOARD ANNOUNCES EXPANSION OF COUNTERPARTIES IN THE TERM ASSET-BACKED SECURITIES LOAN FACILITY, SECONDARY MARKET CORPORATE CREDIT FACILITY, AND COMMERCIAL PAPER FUNDING FACILITY
 
The Fed announced an expansion of the set of firms eligible to transact with and provide services to three of its emergency lending facilities, the Term Asset-Backed Securities Loan Facility (TALF), the Commercial Paper Funding Facility (CPFF) and the Secondary Market Corporate Credit Facility (SMCCF).  The Fed released updated term sheets for the TALF and CPFF and the Federal Reserve Bank of New York issued related FAQs.
 


July 23, 2020
BOSTON FED RELEASES FAQS ON MSLP NONPROFIT FACILITIES

The Federal Reserve Bank of Boston released FAQs regarding lending to nonprofit organizations under the Main Street Lending Program, including the Nonprofit Organization New Loan Facility and the Nonprofit Organization Expanded Loan Facility.
 


July 23, 2020
SBA NOTICE ON PROCEDURES FOR LENDER SUBMISSION OF PPP LOAN FORGIVENESS DECISIONS, SBA LOAN FORGIVENESS REVIEWS
 
The SBA issued a procedural notice informing Paycheck Protection Program (PPP) lenders of the processes for submitting decisions on PPP borrower loan forgiveness applications to SBA, requesting payment of the forgiveness amount determined by the lender, SBA loan forgiveness reviews, and payment of the loan forgiveness amount determined by SBA.
 


July 21, 2020
FEDERAL RESERVE BOARD TO MAINTAIN THE CURRENT SCHEDULE OF PRICES FOR MOST PAYMENT SERVICES THAT THE FEDERAL RESERVE BANKS PROVIDE TO DEPOSITORY INSTITUTIONS IN 2021
 
The Fed announced its intent to maintain the current schedule of prices for most payment services that the Federal Reserve Banks provide to depository institutions in 2021, recognizing the “uncertainties created by the COVID-19 pandemic, . . . the difficulty in applying standard forecasting tools in this environment,” and to “support the business planning of users and providers of payment services.”  Later in 2020, the Fed will issue a Federal Register notice of final fee schedules, effective Jan. 2, 2021, for payment services that the Federal Reserve Banks provide to depository institutions.
 


July 20, 2020
CONGRESSIONAL OVERSIGHT COMMISSION PUBLISHES THIRD REPORT
 
The Congressional Oversight Commission published its third report summarizing “recent key actions the Treasury and the Federal Reserve have taken under Subtitle A” of the CARES Act, and discussing the “current status and effects” of the agencies’ emergency lending programs.  Pursuant to the CARES Act, the Commission must submit reports to Congress every 30 days addressing the agencies’ implementation of the Act.


July 16, 2020
BOSTON FED ISSUES UPDATED MSLP FAQS

 
The Federal Reserve Bank of Boston released updated FAQs regarding the Main Street Lending Program (MSLP), which address, among other topics: (1) the definition of “mortgage debt” as debt that is “solely secured by real property”; (2) expectations with respect to lenders’ compliance procedures to confirm that a potential borrower is not an “Ineligible Business” under the SBA’s regulations; (3) borrower eligibility requirements; (4) the calculation and handling of transaction fees; (5) prohibited uses of loan proceeds; and (6) parameters for setting the interest rates and other terms for MSLP loans.  A redline comparing the updated FAQs with the previous FAQ document released on June 26, 2020 is available here.


July 16, 2020
FED EXTENDS RULE CHANGE REGARDING REG O TREATMENT OF PPP LOANS

 
The Fed announced that it is extending a temporary rule change initially made in April 2020 that modifies the Fed’s Regulation O to allow certain bank directors and shareholders to apply to their banks for Paycheck Protection Program (PPP) loans for their small businesses.  The temporary change will apply to PPP loans made through Aug. 8, 2020.
 


July 16, 2020
FINANCIAL STABILITY OVERSIGHT COUNCIL HOLDS EXECUTIVE MEETING ON THE IMPACT OF COVID-19 ON FINANCIAL INSTITUTIONS AND ON SECONDARY MORTGAGE MARKETS

 
The FSOC met in executive session to discuss developments related to, among other topics, COVID-19 and its impacts on financial institutions and markets and to receive a staff update on an “activities-based review of secondary mortgage market activities.”  
 


July 16, 2020
SEC COVID-19 MARKET MONITORING GROUP STATEMENT ON CREDIT RATINGS, PROCYCLICALITY AND RELATED FINANCIAL STABILITY ISSUES

 
The SEC’s COVID-19 Market Monitoring Group released a statement outlining its initial observations with respect to its exploration of “whether credit assessments and credit rating agency downgrades—and market anticipation of, and responses to, those ratings actions—may (1) contribute to negative procyclicality in certain circumstances and (2) have implications for financial stability.” 
 


July 16, 2020
HFSC INVESTOR PROTECTION, ENTREPRENEURSHIP, AND CAPITAL MARKETS SUBCOMMITTEE HOLDS HEARING ON CAPITAL MARKETS, WORKER PROTECTIONS

 
The House Financial Services Investor Protection, Entrepreneurship, and Capital Markets Subcommittee held a hearing to examine the “business practices and corporate governance decisions that have been adopted in light of the COVID-19 epidemic and their impact on American workers.”


July 16, 2020
HFSC OVERSIGHT AND INVESTIGATIONS SUBCOMMITTEE HOLDS HEARING ON MORTGAGE SERVICERS' IMPLEMENTATION OF THE CARES ACT

 
The House Financial Services Oversight and Investigations Subcommittee held an oversight hearing on mortgage servicers’ implementation of the CARES Act “protections for homeowners facing economic hardships due to the pandemic.” 
 


July 16, 2020
SENATE BANKING COMMITTEE DEMOCRATS SEND LETTER TO FED CHAIRMAN POWELL ON STATE AND LOCAL GOVERNMENT RELIEF

 
Three Senate Banking Committee Democrats sent a letter to Fed Chairman Powell and Treasury Secretary Mnuchin regarding the “need for greater financial assistance to state and local governments,” requesting that the agencies “again reconsider the terms of [its lending] facilities to make them even more attractive to state and local borrowers,” and suggesting several potential modifications.
 


July 16, 2020
FSB STATEMENT ON THE IMPACT OF COVID-19 ON GLOBAL BENCHMARK REFORM

 
FSB Chair and Fed Vice Chairman for Supervision Quarles sent a letter to G20 Finance Ministers and Central Bank Governors ahead of their upcoming virtual meeting on July 18, 2020.  The FSB also delivered a report to the G20 detailing the “financial stability implications of, and policy measures taken in response to, the COVID-19 pandemic.” 
 


July 7, 2020
STATEMENT FROM SECRETARY STEVEN T. MNUCHIN ON CARES ACT LOANS TO MAJOR AIRLINES

 
Treasury Secretary Mnuchin issued a statement regarding loans to passenger air carriers under Division A, Title IV, Subtitle A of CARES Act, noting that five additional airlines have signed letters of intent setting forth the terms on which Treasury is prepared to extend loans under the Act.  Last week, Treasury announced that five major airlines had signed letters of intent relating to direct loans using CARES Act funds.


July 7, 2020
FED VC FOR SUPERVISION QUARLES SPEECH ON POST-CRISIS REFORMS, "TOO-BIG-TO-FAIL" QUESTION

 
Addressing the Exchequer Club of Washington, Fed Vice Chairman Quarles discussed the challenges that the COVID-19 pandemic and the “containment measures taken by many governments in response . . . pose for the financial system and international cooperation on financial stability” in the context of the FSB’s recently-released consultation report evaluating the “progress . . . made in addressing the too-big-to-fail problem for banks.”  During Q&A following his remarks, he reported that the Fed hasn’t “decided whether the resubmitted capital plans will be subject to a full-blown stress test [or] whether it will be . . . along the lines of the sensitivity analysis that [the Fed] did in connection with the last stress test” and that the Fed “plan[s] to issue a set of FAQs” in a “couple [of] weeks” “address[ing] a number of [the] technical and logistical issues surrounding the stress tests.”  Asked whether the exercise performed on firms’ resubmitted capital plans would “be used to recalibrate and update the stress capital buffers for each firm” subject to the rule, he replied that a “principle that . . . [the Fed] followed with respect to the recently-concluded exercise and that has always been a part of the post-crisis capital framework has been that [regulators] should ensure that [there are] robust levels of capital going into a crisis [and] that [firms] maintain robust levels of capital during peace time so that as you enter stress, you aren’t in a position of needing to raise capital, which . . . inevitably would create strong incentives for banks to reign in the extension of credit during the stress event itself.” He added that this principle “will continue to guide us as the COVID event continues to evolve.”  He stressed, moreover, that it is “a pretty strong principle that during the stress event itself, you don’t want to be causing the financial system to rein itself in if you don’t have to because of the consequences for the real economy.”  
 


July 7, 2020
FSOC EXEC MTG (SECONDARY MORTGAGE MARKET LIQUIDITY, STRESS TESTS, ETC.)
 
The FSOC will meet in executive session on July 14 to discuss secondary mortgage market liquidity and receive updates on (1) Fed stress tests and (2) market developments related to COVID-19.
 


July 7, 2020
FINCEN ISSUES ADVISORY ON IMPOSTER SCAMS AND MONEY MULE SCHEMES RELATED TO COVID-19

 
FinCEN issued an advisory alerting financial institutions to “potential indicators of imposter scams and money mule schemes, which are two forms of consumer fraud observed during the COVID-19 pandemic.”
 


July 6, 2020
BOSTON FED ANNOUNCES MAIN STREET LENDING PROGRAM IS FULLY OPERATIONAL
 
The Federal Reserve Bank of Boston (FRB Boston) announced that the Main Street Lending Program (MSLP) is “now fully operational [and] ready to purchase participations in eligible loans that are submitted to the program by registered lenders” and that the Federal Reserve “encourages lenders to begin submitting qualifying loans.”  In addition, FRB Boston announced its intention to publish, “in the coming days,” a “state-by-state listing of lenders accepting new business customers under the [MSLP] and electing to be listed.”
 


July 6, 2020
FED REPORT ON FUNDING, CREDIT, LIQUIDITY, AND LOAN FACILITIES
 
The Fed submitted a periodic report to Congress on the MSLP facilities noting that, as of June 24, 2020, the program was open for lender registration but had not yet purchased any participation in eligible loans and, accordingly, there are no transaction data to report.
 


July 6, 2020
SBA AND TREASURY ANNOUNCE RELEASE OF PAYCHECK PROTECTION PROGRAM LOAN DATA

 
The SBA, in consultation with the Treasury Department, released “detailed loan-level data” regarding the loans made under the Paycheck Protection Program (PPP), including business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and loan amount ranges for each of the 4.9 million PPP loans that have been made.  Notably, the data also includes aggregate statistics regarding dollars lent per state, loan amounts, top lenders, and distribution by industry.
 


July 1, 2020
FEDERAL RESERVE BOARD RELEASES NEW TERM SHEET FOR THE PRIMARY MARKET CORPORATE CREDIT FACILITY, ADDING PRICING AND OTHER INFORMATION
 
The Fed released (1) a new term sheet for the Primary Market Corporate Credit Facility (PMCCF), adding pricing and other information and (2) updated PMCCF FAQs, which address, among other topics, issuer eligibility, issuer disclosure requirements and pricing.  The FAQs note that “[p]ricing will be issuer-specific and informed by market conditions.” 
 


July 1, 2020
NEW YORK FED ANNOUNCES PRIMARY MARKET CORPORATE CREDIT FACILITY LAUNCHES ON JUNE 29
 
The Federal Reserve Bank of New York (FRBNY) announced that the PMCCF became “operational and available for use” on June 29, 2020.
 


July 1, 2020
FEDERAL RESERVE BOARD SUBMITS REPORT TO CONGRESS ON PMCCF, SMCCF AND TALF
 
The Fed submitted a report to Congress on the PMCCF, Secondary Market Corporate Credit Facility (SMCCF) and Term Asset-Backed Securities Loan Facility (TALF) summarizing Fed actions relating to each facility
 


July 1, 2020
NEW YORK FED PUBLISHES COMPOSITION OF SMCCF BROAD MARKET INDEX
 
The FRBNY published an update on the composition of the SMCCF Broad Market Index (Index), noting that the SMCCF “will initially purchase corporate bonds to create a corporate bond portfolio that tracks [the Index].”
 


July 1, 2020
OCC RELEASES ITS SEMIANNUAL RISK PERSPECTIVE FOR SPRING 2020
 
The OCC released its Semiannual Risk Perspective for Spring 2020 examining the “financial impact from the COVID-19 pandemic on the federal banking industry” and concluding that banks “entered the national health emergency related to COVID-19 in sound condition but face weak economic conditions resulting from the economic shutdown in response to the pandemic that will stress financial performance in 2020”, as well as increased operational and compliance risks. 
 


July 1, 2020
NEW YORK DEPARTMENT OF FINANCIAL SERVICES ISSUES A LETTER ON NEW YORK STATE CRA CREDIT FOR COVID-19 RESPONSES
 
NYDFS issued an industry letter alerting NYDFS-regulated banking institutions of opportunities to receive New York State Community Reinvestment Act (CRA) credit for activities undertaken in response to the COVID-19 pandemic.  Specifically, NYDFS will evaluate PPP loans and certain other COVID-19-related lending activity for CRA credit consistent with guidance jointly issued by the Fed, FDIC, and OCC (Agencies) on May 27, 2020 and an interagency statement released by the Agencies on March 19, 2020.
 


July 1, 2020
HOUSE AND SENATE PASS PPP EXTENSION THROUGH AUG. 8, 2020
 
The House and Senate passed, by “unanimous consent,” S. 4116, legislation that amends the CARES Act by extending, through Aug. 8, 2020, the SBA’s authority to make commitments under the Paycheck Protection Program (PPP).  The SBA’s existing authority expired on June 30, 2020.  The President signed the bill on July 4.
 


July 1, 2020
HOUSE FINANCIAL SERVICES COMMITTEE HOLDS HEARING ON OVERSIGHT OF THE TREASURY DEPARTMENT'S AND FEDERAL RESERVE'S PANDEMIC RESPONSE
 
The House Financial Services Committee held an oversight hearing at which Fed Chairman Powell and Treasury Secretary Mnuchin testified on their agencies’ responses to the COVID-19 pandemic and implementation of the CARES Act and fielded questions on a variety of regulatory and supervisory matters.  Responding to concerns regarding the potential “lack of clarity about how [PPP] agent fees are supposed to be processed,” Secretary Mnuchin said that he has “recently become aware of this issue” and noted that joint Treasury-SBA guidance clarified that “banks could pay agent fees out of the fees they received,” adding “that [this guidance] was intended to be based upon a contractual relationship between the agent and the bank.”  He pledged, however, that, “to the extent there’s any confusion on that, [the agencies will] look at clarifying that.”  In addition, asked whether the regulators or Congress should further delay implementation of FASB’s current expected credit losses (CECL) accounting standard, Secretary Mnuchin said “that should be seriously considered”, and Chairman Powell concurred.  Chairman Powell also responded to questions regarding the recent release of the results of the 2020 Dodd-Frank Act stress tests (DFAST 2020) and “sensitivity analyses,” and indicated that the Fed will “provid[e] more clarity about” the “precise metrics [it is] going to be looking at” in additional COVID-19-related analyses to be conducted later this year.  He also noted that the Fed has “already stopped the overwhelming majority of distributions [and] . . . think[s] that’s the right place to be” and stressed that the Fed is “not looking to raise capital standards during a crisis.”


July 1, 2020
FINANCIAL STABILITY BOARD RELEASES STATEMENT ON THE IMPACT OF COVID-19 ON GLOBAL BENCHMARK REFORM
 
The FSB released a statement on the impact of COVID-19 on global benchmark reform, noting that, although it “recognises that some aspects of firms’ transition plans are likely to be temporarily disrupted or delayed,” the FSB “maintains its view” that firms should “remove remaining dependencies on LIBOR by the end of 2021.”
 


June 25, 2020
FEDERAL RESERVE BOARD RELEASES RESULTS OF STRESS TESTS FOR 2020 AND ADDITIONAL SENSITIVITY ANALYSES CONDUCTED IN LIGHT OF THE CORONAVIRUS EVENT
 
The Fed released the results of its 2020 stress tests and additional “sensitivity analyses” that the Board conducted in light of the COVID-19 pandemic.  The results of the sensitivity analyses, in which the Fed assessed large banks’ resiliency under three hypothetical recession scenarios, showed that most firms would “remain well capitalized but several would approach minimum capital levels.”  Although the Fed observes that “all large banks are sufficiently capitalized at present,” in light of these results, for Q3 2020, the Fed is “requiring large banks to preserve capital by suspending share repurchases, capping dividend payments, and allowing dividends according to a formula based on recent income.”  These restrictions will apply during Q3 2020 and “may be extended by the Board quarter-by-quarter, as the economic situation continues to evolve.”  The Fed is also requiring banks subject to CCAR (1) to “re-evaluate” their longer-term capital plans, and (2) to resubmit and update their capital plans later this year to “reflect current stresses.”  The Fed will conduct “additional stress analyses” on the resubmitted plans later this year as “economic conditions evolve.”  The Fed will also conduct “additional analysis” on a quarterly basis to “determine if adjustments to this response are appropriate.”


June 25, 2020
GAO REPORT ON OPPORTUNITIES TO IMPROVE COVID-19 FEDERAL RESPONSE AND RECOVERY EFFORTS
 
GAO released a report to Congress examining “key actions” the federal government has taken, “potential indicators for monitoring the public health system’s preparedness,” “key areas of the economy targeted by federal efforts,” and “lessons learned relevant to the nation’s response” with respect to the COVID-19 pandemic.  Notably, with respect to the SBA’s Paycheck Protection Program (PPP), GAO recommends that the SBA Administrator “develop and implement plans to identify and respond to risks in the [PPP] to ensure program integrity, achieve program effectiveness, and address potential fraud, including in loans of $2 million or less.”
 


June 24, 2020
SENATE BANKING COMMITTEE DEMOCRATS URGE FED TO SUSPEND PAYMENTS TO SHAREHOLDERS DURING PANDEMIC

 
Senators Schatz (D-HI), Brown (D-OH), and Warren (D-MA) sent a letter to Fed Chairman Powell and Vice Chairman for Supervision Quarles raising concerns about how the Board “plans to assess whether U.S. banks under its supervision, including the [G-SIBs], continue to pay dividends as our economy struggles to recover from the ongoing COVID-19 pandemic” and urging the Fed to “implement an across-the-board suspension on bank dividends and discretionary bonus payments.”
 


June 23, 2020
STATEMENT ON THE CONTINUED IMPORTANCE OF HIGH-QUALITY FINANCIAL REPORTING FOR INVESTORS IN LIGHT OF COVID-19

 
The SEC Chief Accountant issued a statement underscoring the importance of high-quality financial reporting in light of the significant impacts of COVID-19, noting that his office “look[s] forward to our financial reporting system continuing to provide a steady flow of timely, decision-useful information to investors and our public capital markets,” and highlighting his office’s “recent engagement with stakeholders throughout the financial reporting system.”
 


June 23, 2020
FEDERAL AND STATE REGULATORY AGENCIES ISSUE EXAMINER GUIDANCE FOR ASSESSING SAFETY AND SOUNDNESS CONSIDERING THE EFFECT OF THE COVID-19 PANDEMIC ON FINANCIAL INSTITUTIONS

 
The Fed, FDIC, OCC, and NCUA, in conjunction with the state bank and credit union regulators, issued examiner guidance instructing examiners to “consider the unique, evolving, and potentially long-term nature of the issues confronting institutions due to the COVID-19 pandemic and to exercise appropriate flexibility in their supervisory response,” while noting that “[n]o action on the part of supervised institutions is required.”
 


June 23, 2020
CFPB ISSUES INTERIM FINAL RULE ON LOSS MITIGATION OPTIONS FOR HOMEOWNERS RECOVERING FROM PANDEMIC-RELATED FINANCIAL HARDSHIPS

 
The CFPB issued an IFR clarifying that mortgage servicers “do not violate Regulation X by offering certain COVID-19-related loss mitigation options based on an evaluation of limited application information collected from the borrower” and “provid[ing] servicers relief from certain requirements under Regulation X that normally would apply after a borrower submits an incomplete loss mitigation application.”
 


June 22, 2020
WARREN AND BROWN URGE REGULATORS: REVERSE RULE THAT WEAKENS CAPITAL REQUIREMENTS AND MAKES BANKS MORE VULNERABLE TO COLLAPSE DURING THIS CRISIS

 
Senators Warren (D-MA) and Brown (D-OH) sent a letter to the Fed, FDIC and OCC expressing concern about the agencies’ recently-issued IFR providing depository institutions subject to the Supplementary Leverage Ratio the option of excluding U.S. Treasury securities and deposits held at Federal Reserve Banks from the calculation of total leverage exposure.
 


June 22, 2020
OCC INTERIM FINAL RULE REDUCES ASSESSMENTS IN RESPONSE TO COVID-19

 
The OCC approved an interim final rule (IFR) implementing a “one-time reduction in assessments” for OCC-regulated entities in response to the impact of the COVID-19 pandemic.  Under the IFR, assessments due on September 30, 2020 “will be calculated using the December 31, 2019 [call report], . . . result[ing] in lower assessments for most OCC-supervised banks.”  However, “if a bank’s assets as reported on the June 30, 2020, call report are lower than on its December 31, 2019, report, the OCC will calculate the assessment due on September 30 for the bank using the June 30 call report.”
 


June 22, 2020
FDIC ISSUES FINAL RULE TO MITIGATE THE DEPOSIT INSURANCE ASSESSMENT EFFECT OF PARTICIPATION IN THE PPP, THE PPPLF, AND THE MMLF

 
The FDIC approved a final rule mitigating the deposit insurance assessment effects of participation in the SBA‘s Paycheck Protection Program (PPP), the Paycheck Protection Program Liquidity Facility (PPPLF), and Money Market Mutual Fund Liquidity Facility (MMLF).
 


June 22, 2020
TREASURY, SBA ISSUE PPP IFR ON REVISIONS TO LOAN FORGIVENESS, LOAN REVIEW PROCEDURE IFRS

 
Treasury and SBA issued an IFR revising prior interim final rules issued on May 22, 2020, by changing key provisions to reflect the enactment of the PPP Flexibility Act of 2020.  Several of the IFR’s amendments are retroactive to the date of enactment of the CARES Act, as required by section 3(d) of the Flexibility Act.
 


June 21, 2020
FRB BOSTON ISSUES UPDATED FAQS ON MSLP

 
The Federal Reserve Bank of Boston released updated FAQs regarding the Main Street Lending Program, which address, among other topics: (1) debt refinancing under the Main Street Priority Loan Facility; (2) the conflicts of interest certification, including with respect to preferred equity; (3) the application of lending limit regulations; and (4) SPV purchases under earlier program terms.
 


June 18, 2020
SBA PUBLISHES REVISED PPP FORGIVENESS APPLICATION AND NEW “EZ” VERSION
 
The SBA, in consultation with Treasury, published (1) a revised Paycheck Protection Program (PPP) loan forgiveness application and corresponding instructions incorporating changes made by the PPP Flexibility Act of 2020 and (2) a new “EZ version” of the forgiveness application and related instructions that apply to borrowers that meet certain eligibility requirements.


June 18, 2020
FHFA EXTENDS FORECLOSURE AND EVICTION MORATORIUM
 
The FHFA announced that Fannie Mae and Freddie Mac will extend their single-family moratorium on foreclosures and evictions from June 30, 2020 “until at least August 31, 2020.” 
 


June 18, 2020
OCC ISSUES BULLETIN ON PREEMPTION
 
The OCC issued a bulletin “recogniz[ing] that a wide range of stakeholders, including state and local governments, have an important role to play in the country’s COVID-19 response,” but “remind[ing] stakeholders” that national banks, federal savings associations, and federal branches and agencies of foreign banks are “governed primarily by uniform federal standards” and “generally are not subject to state law limitations.” 
 


June 18, 2020
PRAC SENDS LETTER TO HOUSE AND SENATE OVERSIGHT COMMITTEES ON CARES ACT OVERSIGHT
 
The Pandemic Response Accountability Committee (PRAC) sent a letter to the leaders of the House and Senate Appropriations Committees, as well as the House Oversight and Reform and the Senate Homeland Security and Governmental Affairs Committees reporting that the  Treasury Department’