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  • Daily Financial Regulation Update -- Saturday, October 24, 2020

    by
    FedACTion Task Force
    | Oct 24, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Board

    Economics and Epidemics: Evidence from an Estimated Spatial Econ-SIR Model

    October 23, 2020

    The Divisions of Research & Statistics and Monetary Affairs of the Federal Reserve Board released a paper titled “Economics and Epidemics: Evidence from an Estimated Spatial Econ-SIR Model.” According to the paper, economic analysis of effective policies for managing epidemics requires an integrated economic and epidemiological approach.

    Federal Reserve Bank of New York

    How Has China’s Economy Performed under the COVID-19 Shock?

    October 23, 2020

    The Federal Reserve Bank of New York’s Liberty Street Economics blog released a post titled “How Has China’s Economy Performed under the COVID-19 Shock?” The authors examine the impact of the COVID-19 crisis on China’s Gross Domestic Product growth using a set of alternative growth indicators.

    Treasury Market Liquidity and Early Lessons from the Pandemic Shock

    October 23, 2020

    Lorie K. Logan, Executive Vice President at the Federal Reserve Bank of New York, gave remarks at the Brookings-Chicago Booth Task Force on Financial Stability meeting on Treasury market liquidity and early lessons from the COVID-19 shock.

    At the New York Fed: Sixth Annual Conference on the U.S. Treasury Market

    October 23, 2020

    The Federal Reserve Bank of New York’s (New York Fed) Liberty Street Economics blog released a post titled “At the New York Fed: Sixth Annual Conference on the U.S. Treasury Market.”

    Federal Reserve Bank of Boston

    The COVID-19 Recession: Why It’s Different, What That Means for Cities, Service Workers, and Education

    October 23, 2020

    Christopher Foote, Senior Economist and Policy Advisor at the Federal Reserve Bank of Boston (Boston Fed), discussed COVID-19’s impact on the Boston Fed’s podcast, Six Hundred Atlantic.

    International

    European Commission

    Latest Eurobarometer Survey (July-August): Economic Situation is EU Citizens’ Top Concern in Light of the Coronavirus Pandemic

    October 23, 2020

    According to a Standard Eurobarometer survey released by the European Commission, trust in the EU remains stable in a troubled period marked by the COVID-19 pandemic, and Europeans trust the EU to make the right decisions in response to the COVID-19 pandemic in the future.

  • Daily Financial Regulation Update -- Friday, October 23, 2020

    by
    FedACTion Task Force
    | Oct 22, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    U.S. Department of the Treasury

    Joint Statement on UK-U.S. Financial Regulatory Working Group Meeting

    October 22, 2020

    UK and U.S. participants held the third meeting of the UK-U.S. Financial Regulatory Working Group (Working Group) on October 20, 2020. The Working Group meeting focused on five themes: (i) the economic response to, and potential financial stability impacts of, the COVID-19 crisis; (ii) international cooperation and 2021 priorities; (iii) cross-border rules and overseas recognition/equivalence/substituted compliance regimes; (iv) sustainable finance; and (v) financial innovation.

    Federal Reserve Board

    Business Exit during the COVID-19 Pandemic: Non-Traditional Measures in Historical Context

    October 22, 2020

    The Divisions of Research & Statistics and Monetary Affairs of the Federal Reserve Board released a paper titled “Business Exit during the COVID-19 Pandemic: Non-Traditional Measures in Historical Context.” According to the paper, given lags in official data releases, economists have studied “alternative data” measures of business exit resulting from the COVID-19 pandemic. The authors explore a range of alternative measures and indicators of business exit, including novel measures based on payroll events and phone-tracking data, and find tentative evidence that exit has been elevated during 2020. Evidence is somewhat mixed, however, and exiting businesses do not appear to represent a large share of U.S. employment.

    Federal Reserve Bank of New York

    New York Fed Revises Master Loan and Security Agreement and Releases Related Updates to Frequently Asked Questions on the Term Asset-Backed Securities Loan Facility (TALF)

    October 22, 2020

    The Federal Reserve Bank of New York has released a revised Master Loan and Security Agreement (MLSA) and updated Frequently Asked Questions (FAQs). The MLSA sets forth revised requirements and obligations of TALF borrowers and TALF Agents under a Federal Reserve program stood up to address the economic challenges created by the COVID-19 pandemic. The changes become effective November 5, 2020.

    New York Fed Announces Fourth “Economic Inequality Policy Series” Event

    October 22, 2020

    On October 27, the Federal Reserve Bank of New York (New York Fed), in collaboration with the NYU Furman Center, will convene a virtual forum on COVID-19’s effects on residential and commercial evictions, titled “The COVID-19 Eviction Cliff—Who’s Affected and How to Mitigate Short- and Long-term Crises?”. The event will highlight insights on housing, commercial leases, and evictions and include conversations with researchers, government, think tanks and nonprofit leaders.

    Ginnie Mae

    The Ginnie Mae Global Market Analysis Report

    October 22, 2020

    Ginnie Mae released its October 2020 Global Market Analysis Report highlighting that:

    (i) Home prices have turned up for the 12-month period ending August 2020, the first upturn since COVID-19 hit;

    (ii) The net increase in Ginnie Mae outstanding is far smaller than its government-sponsored enterprises counterparts; this reflects negative net Federal Housing Administration issuance;

    (iii) The Ginnie Mae nonbank origination share reached a record high of 91.4% in August 2020;

    (iv) The Federal Reserve’s share of agency debt increased from 15% in the first quarter of 2020 to 20% in the second quarter of 2020 due to substantial purchases of mortgage-backed securities (MBS) in response to the COVID-19 crisis; and

    (iv) Agency MBS held by foreigners in June 2020 ($1.16 trillion), while up on a year-over-year basis, has declined slightly since March 2020, possibly reflecting increased MBS absorption by the Federal Reserve.

    Ginnie Mae Introduces “Capital Markets Live!”

    October 22, 2020

    Ginnie Mae launched a new podcast series “Capital Markets Live!”. The podcast explores issues that affect Ginnie Mae mortgage-backed securities, with insight from officials within the agency and from market participants.

    Department of Labor

    DOL Releases Unemployment Insurance Weekly Claims Report Update

    October 22, 2020

    The U.S. Department of Labor released its Unemployment Insurance Weekly Claims Report Update, which found that in the week ending October 17, the advance figure for seasonally adjusted initial claims was 787,000, a decrease of 55,000 from the previous week’s revised level. The previous week’s level was revised down by 56,000 from 898,000 to 842,000. The 4-week moving average was 811,250, a decrease of 21,500 from the previous week’s revised average. The previous week’s average was revised down by 33,500 from 866,250 to 832,750.

  • Daily Financial Regulation Update -- Thursday, October 22, 2020

    by
    FedACTion Task Force
    | Oct 22, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Board

    Achieving a Broad-Based and Inclusive Recovery

    October 21, 2020

    Governor Lael Brainard gave a speech at the Society of Professional Economists Annual Online Conference titled “Achieving a Broad-Based and Inclusive Recovery.” In the speech, she discusses the K-shaped recovery from the COVID-19 crisis and the Federal Reserve’s commitment to providing sustained accommodation to achieve a broad-based recovery.

    Federal Reserve Bank of New York

    Labor Market Policies during an Epidemic

    October 21, 2020

    The Federal Reserve Bank of New York has released a staff report titled “Labor Market Policies during an Epidemic.” In the report, the authors study the usefulness of the two types of labor market policies (both in isolation and in conjunction) implemented by the U.S. government in response to the COVID-19 pandemic: expanding unemployment insurance payments and granting payroll subsidies to vulnerable firms.

    Federal Housing Finance Agency

    Temporary Policy Allowing Purchase of Qualified Loans in Forbearance Extended

    October 21, 2020

    The Federal Housing Finance Agency approved an extension of the current temporary policy that allows for the purchase by Fannie Mae and Freddie Mac (the Enterprises) of certain single-family mortgages in forbearance that meet specific eligibility criteria as set by the Enterprises. The policy is extended for loans originated through November 30, 2020.

    International

    Bank of England

    The Monetary Policy Toolbox in the UK

    October 21, 2020

    Dave Ramsden, Deputy Governor for Markets & Banking at the Bank of England and a member of the UK’s Monetary Policy Committee (MPC), gave a speech at the Society of Professional Economists’ Annual Conference titled “The Monetary Policy Toolbox in the UK.” In the speech, he gives his perspective on the MPC’s response to the policy challenges of the COVID-19 pandemic and how the MPC has used its “monetary policy toolbox.”

  • Daily Financial Regulation Update -- Wednesday, October 21, 2020

    by
    FedACTion Task Force
    | Oct 21, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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

    Small Business Capital Recovery Bill Introduced

    October 20, 2020

    U.S. Senators Marco Rubio (R-FL) and Jim Risch (R-ID), Chairman and former Chairman of the Senate Committee on Small Business and Entrepreneurship, along with Senators Susan Collins (R-ME) and Josh Hawley (R-MO), introduced the Small Business Access to Recovery Capital Act. The legislation would provide expanded relief measures to the Small Business Administration’s Section 7(a) loan program for one year to help businesses cope with challenges posed by the COVID-19 pandemic. The legislation would (i) waive borrower and lender fees; (ii) increase the government guarantee to 95%; (iii) increase the maximum loan value from $5,000,000 to $10,000,000; and (iv) waive debt repayment of principal, interest and fees for any new loans made under the Section 7(a) program for one year.

    Federal Agencies

    Federal Reserve Board

    Agencies Issue Final Rule Addressing the Net Stable Funding Ratio to Strengthen Resilience of Large Banks

    October 20, 2020

    The Board of Governors of the Federal Reserve System (Federal Reserve), Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency finalized a joint rule strengthening the resilience of large banks by requiring them to maintain a minimum level of stable funding over a one-year period. The net stable funding ratio (NSFR) final rule will require large banks to maintain a minimum level of stable funding, relative to each institution’s assets, derivatives, and commitments. The rule will become effective on July 1, 2021. Holding companies and covered nonbank companies regulated by the Federal Reserve will be required to publicly disclose their NSFR levels semiannually beginning in 2023.

    The Financial Stability Board’s Roadmap for Addressing Vulnerabilities of Nonbank Financial Intermediaries

    October 20, 2020

    Randal K. Quarles, Vice Chair for Supervision at the Board of Governors of the Federal Reserve System, gave a speech at the Securities Industry and Financial Markets Association Annual Meeting titled “The Financial Stability Board’s Roadmap for Addressing NBFI Vulnerabilities.” In the speech, Mr. Quarles shares some of the emerging elements of the Financial Stability Board’s (FSB) review of the shocks related to COVID-19 and the associated containment measures, primarily how the shock moved through the financial system and which critical vulnerabilities it exposed. He also outlines further work that the FSB plans to conduct, including a more in-depth assessment of how various segments of the nonbank financial intermediation sector performed.

    Modernizing and Strengthening CRA Regulations: A Conversation with the Housing Community

    October 20, 2020

    Governor Lael Brainard of the Board of Governors of the Federal Reserve System gave a speech at the National Housing Conference Advisory Council Meeting titled “Modernizing and Strengthening CRA Regulations: A Conversation with the Housing Community,” in which she discusses Community Reinvestment Act modernization and how the process can help address housing challenges facing minority and low- and moderate-income communities around the country.

    Federal Reserve Bank of New York

    The Federal Reserve’s Corporate Credit Facilities: Why, How, and For Whom

    October 20, 2020

    Daleep Singh, Executive Vice President of the Federal Reserve Bank of New York, gave a speech at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness titled “The Federal Reserve’s Corporate Credit Facilities: Why, How and For Whom.” Mr. Singh explains why the Federal Reserve’s corporate credit facilities were necessary and why transparency, access and accountability were critical to their implementation.

    Federal Deposit Insurance Corporation

    The FDIC Approves Interim Final Rule to Provide Temporary Relief from Part 363 Audit and Reporting Requirements

    October 20, 2020

    The Federal Deposit Insurance Corporation (FDIC) issued an interim final rule (IFR) to provide relief for such insured depository institutions that, without regulatory action, would be required to incur substantial costs of a temporary basis due to the influx of cash resulting from participation in the Paycheck Protection Program, the Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility, or due to other factors such as the effects of other government stimulus efforts. The IFR will allow institutions that have experienced growth to determine whether they are subject to the requirements of Part 363 of the FDIC’s regulations for fiscal years ending in 2021 based on the lesser of the insured depository institution’s (a) consolidated total assets as of December 31, 2019 or (b) consolidated total assets as of the beginning of their fiscal years ending in 2021. The IFR is effective immediately.

    Department of Housing and Urban Development/Federal Housing Administration

    FHA Extends COVID-19 Forbearance Request Timeframe for Single Family Homeowners

    October 20, 2020

    The Federal Housing Administration (FHA) announced that it is extending the date for single family homeowners with FHA-insured mortgages to request an initial forbearance from their mortgage servicer to forbear their mortgage payments for up to six months. Homeowners experiencing a financial hardship as a result of the COVID-19 pandemic may now request an initial forbearance through the end of this year. Previously, homeowners with FHA-insured mortgages needing assistance had until October 30, 2020 to request a COVID-19-related financial hardship forbearance from their mortgage servicer.

    Freddie Mac

    September Securitization Forbearance Report Released

    October 20, 2020

    Freddie Mac released its September Securitization Forbearance Report, which details data received from master servicers that demonstrates the impact on Freddie Mac securitizations of (i) its forbearance relief plan implemented in March 2020 (which allows qualifying multifamily borrowers to defer up to three months of mortgage payments) and (ii) its supplemental relief options for qualified affected borrowers announced in June 2020.

    International

    Bank of England

    Gertjan Vlieghe Delivers Speech “Assessing the Health of the Economy”

    October 20, 2020

    Gertjan Vlieghe, External Member of the Monetary Policy Committee of the Bank of England, gave a speech titled “Assessing the Health of the Economy.” In the speech, he examines the impact of the COVID-19 pandemic on the UK economy and the impact of the recent rise in infections on economic recovery.

  • Daily Financial Regulation Update -- Tuesday, October 20, 2020

    by
    FedACTion Task Force
    | Oct 20, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Board

    Vice Chair Clarida Delivers Speech on U.S. Economic Outlook, Monetary Policy, and Initiatives to Sustain the Flow of Credit to Households and Firms

    October 19, 2020

    Vice Chair Richard H. Clarida of the Board of Governors of the Federal Reserve System (Federal Reserve) delivered a speech at the Unconventional Convention of the American Bankers Association. In his remarks, Vice Chair Clarida noted that it will take some time to return to the levels of economic activity and employment that prevailed at the business cycle peak in February and confirmed that the Federal Reserve is committed to using its full range of tools to support the economy.

    Federal Reserve Bank of New York

    New York Fed Selects Additional Firms To Broaden its Counterparty Base for Agency CMBS and CPFF

    October 19, 2020

    The Federal Reserve Bank of New York announced the selection of additional counterparties to support agency commercial mortgage backed securities (agency CMBS) purchases and the Commercial Paper Funding Facility.

    Federal Reserve Bank of Boston

    Boston Fed Research Finds Future of Child Care Sector Uncertain

    October 19, 2020

    Beth Mattingly, Assistant Vice President (Community Development Research & Communications) of the Federal Reserve Bank of Boston, partnered with Dr. Jess Carson of the Carsey School of Public Policy at the University of New Hampshire to analyze the pandemic’s impact on the child care sector. Mattingly and Carson found four major concerns ahead for providers and parents:

    (1) uneven access to government assistance and loans;

    (2) worsening staff shortages;

    (3) accrued costs pushing center-based programs to the brink; and

    (4) continuing and potentially fatal pressures on centers that survived.

    Federal Housing Finance Agency

    FHFA Further Extends COVID-Related Loan Flexibilities

    October 19, 2020

    The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend several loan origination flexibilities until November 30, 2020. The flexibilities were set to expire on October 31, 2020.

    Calabria Delivers Remarks at Mortgage Bankers Association - 2020 Convention and Expo

    October 19, 2020

    Dr. Mark A. Calabria, Director of the Federal Housing Finance Agency (FHFA), announced that the FHFA is releasing a new rule that will ensure stakeholders and the public always have a formal opportunity to provide feedback when Fannie Mae and Freddie Mac consider new products or lines of business.

    International

    Bank of England

    Bank of England Explains how High-Frequency Data Helps in Predicting COVID-19's Impact on GDP

    October 19, 2020

    As part of its Bank Overground web series, the Bank of England shared how High-frequency measures of formal restrictions and household mobility can help assess COVID-19’s impact on GDP.

  • This Week in Washington for October 19, 2020

    by
    Dina Ellis
    | Oct 19, 2020

    THE BIG PICTURE

    For the latest advice for businesses dealing with the coronavirus, be sure to check out Paul Hastings’ targeted alert series: https://www.paulhastings.com/coronavirus

    With just over two weeks to go until Election Day, the President has ramped up his campaign schedule, holding a series of rallies in swing states in an attempt to close the gap in the polls, which show former Vice President Joe Biden leading by several points nationally. As of Saturday, over 26 million Americans had cast their ballots through early and mail-in voting, an unprecedented turnout that showcases voters’ enthusiasm in a particularly polarized year. On Thursday the President and Biden participated in dueling televised town halls that were held in lieu of the second presidential debate, which was canceled after the President’s COVID-19 diagnosis. During the President’s event, he sparred with host Savannah Guthrie on his views on mask wearing, and drew criticism for declining to denounce the QAnon conspiracy theory. The candidates are set to face off for the final time this Thursday evening during a debate in Nashville.

    Coronavirus cases in the United States continue to surge, with over 8.1 million infections and nearly 220,000 deaths reported to date as the public grows weary of mitigation efforts. One of the vaccine candidates was forced to pause its trial after a participant reported an unexplained illness. Public health officials continue to stress the importance of social distancing and mask adherence as the best weapons in our fight against the pandemic until a vaccine and effective therapeutics are readily available. First Lady Melania Trump published an essay describing her personal experience with COVID-19, and revealed for the first time that her son Barron had also tested positive, but remained asymptomatic and has since tested negative.

    Judge Amy Coney Barrett appeared before the Senate Judiciary Committee for four days of hearings on her nomination to the Supreme Court. The Democrats on the panel grilled Barrett on her views on the Affordable Care Act, a woman’s right to choose, and climate change, particularly honing in on healthcare, given the Court is set to hear oral arguments on a challenge to the ACA the week following the election. Despite continued insistence from Democrats that the vacant seat should not be filled until the American people have spoken, the Committee is expected to vote to advance her nomination on Thursday, after which a full Senate vote will be held.

    Negotiations over an additional stimulus package continued throughout last week and over the weekend, although the chances for an agreement prior to the election continue to dim. The parties disagree over the scale of the proposal, and while the President has indicated he would support a larger package, Senate Republicans are not on board with the multi-trillion dollar price tag. On the Democratic side, House Speaker Nancy Pelosi decried the insistence on inclusion of “poison pills,” such as liability protections for businesses. Senate Majority Leader Mitch McConnell plans a vote on a slimmed down US$500B measure this Tuesday, which Democrats have criticized as being insufficient and will likely block. Federal Reserve Bank of Minneapolis President Neel Kashkari warned of the economic fallout of delays in enacting relief, predicting that “we’re going to continue to see a grinding, very slow recovery, with thousands of small businesses around the country going bankrupt.”

    Other highlights of last week include:

    • On Tuesday the Supreme Court granted the Trump administration’s request to halt the census count pending the outcome of an appeal, effectively blocking a lower court’s order that the enumeration be extended through October 31.
    • The Treasury Department reported on Friday that the federal deficit has tripled, ballooning to US$3.1T in fiscal year 2020.

    LAST WEEK ON THE HILL

    Senator Sherrod Brown Urges Regulators Do More to Protect the American Economy from Further Devastation: On Thursday, Sen. Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, sent a letter to the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) urging the agencies to take action now to protect workers and families from even more economic hardship, instead of helping Wall Street. Brown in his letter made clear that the American economy is vulnerable and will remain at risk of another financial crisis as long as the Administration pursues a deregulatory agenda, and stalls much-needed relief for workers and small businesses.

    Warren Calls for SEC, CFTC Insider Trading Investigation of Pandemic Profiteering: On Thursday, Sen. Elizabeth Warren (D-MA) formally requested that the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) conduct an insider trading investigation after reports that in February, Trump administration officials privately gave dire warnings to conservative allies and Republican donors about the risks to the economy from the COVID-19 pandemic while President Donald Trump was publicly optimistic about the impact of the virus.

    THE REGULATORS

    CFTC Staff Provides Reporting Relief for Swaps Related to Upcoming DCO Auctions as Part of the Industry-Wide Initiative to Transition Away from LIBOR: On Tuesday, the CFTC’s Division of Market Oversight announced it has provided swap transaction and pricing data reporting relief to specific derivatives clearing organizations (DCOs) and market participants participating in upcoming DCO auctions that will help transition certain cleared swaps from discounting using the Effective Federal Funds Rate (EFFR) to the Secured Overnight Financing Rate (SOFR). This discounting transition is an essential part of the industry-wide initiative to transition from swaps that reference the London Interbank Offered Rate (LIBOR), and other interbank offered rates, to swaps that reference alternative benchmarks. The relief provides for a delay in the reporting of swap transaction and pricing data under CFTC Regulation 43.3 for specific swaps that may be executed as part of the upcoming discounting transition auctions that will be held by LCH Limited or CME Inc. The relief allows the reporting of swap transaction and pricing data for the relevant swaps to be delayed until November 19, 2020.

    CFTC Finalizes Position Limits Rule at October 15 Open Meeting: On Thursday, the CFTC approved three final rules, including one regarding position limits for derivatives, completing the Commission’s major rulemakings related to implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The rules include: (1) by a 3-2 vote, the Commission approved a final rule amending regulations of speculative position limits to conform with certain Dodd-Frank amendments to the Commodity Exchange Act; (2) the Commission unanimously approved a final rule that amends the margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no banking regulator; and (3) the Commission unanimously approved a final rule that amends CFTC Regulation 3.10(c), which provides exemptions from intermediary registration under certain conditions to foreign-located persons, in connection with their U.S. commodity interest transactions conducted on behalf of persons located outside the United States (the 3.10 Exemption).

    SEC Updates Auditor Independence Rules: On Friday, the SEC announced that it adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X. The SEC touted the final amendments as an effort to modernize the rules and more effectively focus the analysis on relationships and services that may pose threats to an auditor’s objectivity and impartiality. Chairman Jay Clayton celebrated the move, saying “These modernized auditor independence requirements will increase investor protection by focusing audit clients, audit committees, and auditors on areas that may threaten an auditor’s objectivity and impartiality.”

    Federal Reserve Requests Public Comment on Technical, Clarifying Updates Regarding the FOMC’s Rules Regarding Availability of Information: On Wednesday, the Federal Reserve requested public comment on technical, clarifying updates regarding the Federal Open Market Committee’s Rules Regarding Availability of Information, which describe its Freedom of Information Act (FOIA) procedures. The proposal would implement non-substantive updates to the Committee’s FOIA procedures to make them consistent with the Committee’s current practices and to incorporate recent changes in law and guidance. The proposal also incorporates formatting and language from the Federal Reserve Board’s revisions to its own FOIA procedures, which are effective October 15, 2020.

    CFPB Director’s Announced Reorganizations of the CFPB’s Division of Supervision, Enforcement, and Fair Lending Faces Criticism: On Wednesday, the CFPB announced a major reorganization of its Division of Supervision, Enforcement, and Fair Lending (SEFL). Sen. Sherrod Brown (D-OH) criticized the announcement, saying, “It is critical that the public and this Committee understand why Director Kraninger would undertake such a major reorganization, which amounts to a demotion for the Office of Enforcement—a critical part of the CFPB’s mission to protect consumers—just weeks before the election. Organizational structure shapes policy, and this reorganization appears to be an effort to weaken the Office of Enforcement and hinder the Bureau’s ability to protect consumers against companies’ abusive business practices and enforce federal consumer financial laws now and in the future.”

    CFPB Partners with Pro Linebacker Brandon Copeland to Host a Virtual Town Hall on Managing Money during the COVID-19 Pandemic: On Thursday, the CFPB announced that Bureau Director Kathy Kraninger and Brandon Copeland, pro linebacker and University of Pennsylvania Professor, will host a virtual town hall to discuss how people can better manage their money during tough times. The event, titled “Pressure Creates Diamonds: Money Management During Coronavirus,” will take place on Tuesday, Oct. 27 and will feature discussions on managing and protecting one’s finances during difficult times, financial planning, and building savings. Director Kraninger and Mr. Copeland will also discuss free resources available to help people facing financial difficulties due to the pandemic, including information on mortgage forbearance, economic impact payments, and student loans.

    FDIC Advisory Committee to Discuss Results of 2019 Survey of Household Use of Banking and Financial Services: On Friday, the FDIC announced that its Advisory Committee on Economic Inclusion (ComE-IN) will meet on Thursday, October 22, to discuss the results of How America Banks: 2019 FDIC Survey of Household Use of Banking and Financial Services, the FDIC’s biennial survey of thousands of U.S. households administered in partnership with the U.S. Census Bureau. During the meeting, the committee also will discuss the financial status and health of American households during the COVID crisis, the economic conditions in members’ local communities, and other topics.

    FDIC Publishes Resource Guide to Promote Investment Partnerships with FDIC-Insured Minority Banks and Community Development Financial Institutions: On Friday, the FDIC published a new resource guide to promote private and philanthropic investment partnerships with FDIC-insured Minority Depository Institutions (MDIs) and Community Development Financial Institution banks (CDFI banks). “Investing in the Future of Mission-Driven Banks” is FDIC’s latest effort to build supportive partnerships between these banks and other financial institutions, private companies, and philanthropic organizations.

    NCUA Urges Consumers and Credit Unions to Remain Vigilant against Cyber Threats: On Wednesday, the National Credit Union Administration issued a reminder to credit union industry stakeholders to remain vigilant and take steps to protect their systems and critical infrastructure. “In this day and age, cybersecurity is everyone’s business,” NCUA Chairman Rodney Hood said. “Even during COVID-19, hackers and thieves do not rest. We expect credit unions to take appropriate measures to protect themselves and their members, and we have information and resources to help them do that.”

    DOJ Unseals Superseding Indictment Charging Nationwide Money Laundering Network: On Thursday, the Justice Department announced the unsealing of a superseding indictment charging six individuals with participating in a conspiracy to launder millions of dollars of drug proceeds on behalf of foreign cartels. This superseding indictment is the result of a nearly four-year investigation into the relationship between foreign drug trafficking organizations and Asian money laundering networks in the United States, China, and elsewhere.

    NASAA Announces Agenda for Fintech and Cybersecurity Symposium: On Wednesday, the North American Securities Administrators Association (NASAA) announced the agenda and speakers for its October 27, 2020 Fintech and Cybersecurity Symposium. The program will include four discussions: (1) Algorithms Make the World Go ’Round: From financial inclusion to money distribution during the pandemic, this panel will explore the ways fintech innovation can solve real-world problems; (2) From Sentiment Investing to Roboadvising: How AI is Transforming the Financial Services Industry: This panel will focus on how financial institutions are using AI, machine learning, data analytics, and predictive behavior to better serve investors; (3) Technology as Sword and Shield: This panel will focus on how technology can be used both to perpetrate and defend against cyberattacks, especially in a teleworking environment, and the consequences of failing to fortify the workspace; and (4) Regulating Remotely: Cyber Challenges During a Challenging Time: This panel will feature three speakers who will each provide a different perspective on regulatory and cybersecurity challenges in the wake of the COVID-19 pandemic.

    COMINGS AND GOINGS AT THE AGENCIES

    SEC Names Jessica Kane Director of Division of Corporation Finance’s Disclosure Review Program: On Tuesday, the SEC announced that Jessica Kane has been named Director of the Division of Corporation Finance’s Disclosure Review Program. Ms. Kane has served as Director of the Office of Credit Ratings since 2017, leading its work to oversee credit rating agencies registered with the Commission as NRSROs.

    SEC Names Tamara Brightwell Deputy Director of Division of Corporation Finance’s Disclosure Review Program: On Tuesday, the SEC announced that Tamara Brightwell has been named Deputy Director of the Division of Corporation Finance’s Disclosure Review Program. Ms. Brightwell has served as Deputy Chief Counsel in the Division of Corporation Finance’s Office of Chief Counsel since 2018.

    SEC Appoints PCAOB Chief Auditor Megan Zietsman to PCAOB Board: On Thursday, the SEC announced the appointment of Megan Zietsman as a Board member of the Public Company Accounting Oversight Board (PCAOB) for a term ending in October 2025. Ms. Zietsman has been the Chief Auditor and Director of Professional Standards of the PCAOB since February 2019.

    Charles Phillips Steps Down from New York Fed Board of Directors: On Friday, the Federal Reserve Bank of New York announced that Charles Phillips had stepped down from its Board of Directors effective immediately. Mr. Phillips joined the Board in 2017 as a Class B director, and his three-year term was set to expire on December 31, 2020.

    OTHER NOTEWORTHY NEWS

    New York Department of Financial Services Calls for Regulation of Social Media Giants After Hack Investigation: On Wednesday, the New York State Department of Financial Services released a report on the Department’s investigation into the July 15, 2020 hack into the social media accounts of cryptocurrency firms and well-known public figures, following Governor Andrew Cuomo’s request to investigate the matter. Among DFS’ findings: the global social media platform lacked adequate cybersecurity protections and, at the time of the attack, did not have a chief information security officer. The report recommends a new cybersecurity regulatory framework for giant social media companies. “Social media platforms have quickly become the leading source of news and information, yet no regulator has adequate oversight of their cybersecurity. The fact that the platform was vulnerable to an unsophisticated attack shows that self-regulation is not the answer,” said Superintendent of Financial Services Linda Lacewell.

    ***
    Paul Hastings’ Government Relations team is monitoring these issues. We help our clients craft strategies to address federal legislative and regulatory matters. Please reach out to us if your organization needs assistance with congressional or regulatory relations.


  • Daily Financial Regulation Update -- Saturday, October 17, 2020

    by
    FedACTion Task Force
    | Oct 17, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Bank of New York

    Federal Reserve Bank of New York Publishes Blog Post Examining Consumers’ Expectations of COVID-19’s Effects

    October 16, 2020

    The Federal Reserve Bank of New York published a Liberty Street Economics blog post entitled “How Do Consumers Believe the Pandemic Will Affect the Economy and Their Households?” In the post, the authors analyze consumers’ beliefs about the duration of the economic impact of the COVID-19 pandemic, and present new evidence on consumers’ expected spending, income, debt delinquency, and employment outcomes conditional on different scenarios for the future path of the pandemic.

    New York Fed Releases October 2020 Business Leaders Survey

    October 16, 2020

    The Federal Reserve Bank of New York released its Business Leaders Survey (Survey) for the month of October 2020. According to the Survey, activity in the region’s service sector declined slightly. The Survey’s headline business activity index held steady but remained negative at -4.9. The Survey’s business climate index was little changed at -65.9, indicating that the vast majority of firms continued to view the business climate as worse than normal.

    New York Fed Releases Supplemental Survey Report

    October 16, 2020

    The Federal Reserve Bank of New York released a Supplemental Survey Report (Report), reflecting responses to supplemental questions in the October 2020 Empire State Manufacturing Survey and Business Leaders Survey. According to the Report, service sector respondents reported that prices paid overall rose 4.1%, on average, over the past twelve months, with the rate expected to slow to 3.2% over the next twelve months; and, that manufacturers reported an average rise of 3.6% over the past year and expect the rate to accelerate slightly to 3.9% over the next twelve months.

    International

    UK Financial Conduct Authority

    FCA Proposes Additional Measures to Help Insurance Customers in Financial Difficulty

    October 16, 2020

    The UK Financial Conduct Authority (FCA) published proposals on how firms should, after October 31, continue to seek to help customers who hold insurance and premium finance products and may be in financial difficulty because of COVID-19. Under guidance previously published by the FCA in August, the expectation to grant payment deferrals expires on October 31.

  • Daily Financial Regulation Update -- Friday, October 16, 2020

    by
    FedACTion Task Force
    | Oct 16, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Board

    What Happened? What Have We Learned From It? Lessons from COVID-19 Stress on the Financial System

    October 15, 2020

    Randal K. Quarles, Vice Chair for Supervision at the Board of Governors of the Federal Reserve System, gave a speech at the Institute of International Finance titled “What Happened? What Have We Learned from It? Lessons from COVID-19 Stress on the Financial System.”

    Modernizing and Strengthening CRA Regulations: A Conversation with Minority Depository Institutions

    October 15, 2020

    Governor Lael Brainard of the Board of Governors of the Federal Reserve System gave a speech to the National Bankers Association titled “Modernizing and Strengthening CRA Regulations: A Conversation with Minority Depository Institutions.”

    Federal Reserve Bank of New York

    U.S. Economy in a Snapshot

    October 15, 2020

    The Federal Reserve Bank of New York released its monthly “U.S. Economy in a Snapshot.” According to the snapshot, (i) growth of consumer spending slowed some in August, (ii) real business equipment spending plunged in the second quarter of 2020, reflecting disruptions linked to the COVID-19 pandemic, (iii) housing activity continued to expand in August, (iv) payroll employment grew at a slower pace in September, (v) core personal consumer expenditure inflation remained below the Federal Open Market Committee’s longer-run objective, and (vi) U.S. equity indices rose slightly over the last month, amid significant volatility.

    Empire State Manufacturing Survey

    October 15, 2020

    The Federal Reserve Bank of New York released its monthly Empire State Manufacturing Survey. According to firms responding to the October 2020 survey, business activity expanded modestly in New York State, although at a slower pace than in September. New orders and shipments continued to increase, while unfilled orders continued to decline and inventories moved lower. Manufacturers reported a small increase in employment, and a significantly longer average workweek. Overall, firms remain optimistic that conditions would improve over the next six months.

    COVID-19 Has Temporarily Supercharged China’s Export Machine

    October 15, 2020

    The Federal Reserve Bank of New York’s Liberty Street Economics blog post released a post titled “COVID-19 Has Temporarily Supercharged China’s Export Machine.” According to the authors, China’s export performance has been stronger than expected this year. However, a closer look at the data reveals that this growth has not been broad-based, but instead concentrated in areas that were well-positioned to take advantage of the COVID-19 crisis, namely, production of medical supplies and school-from-home and work-from-home goods. Once the crisis passes, China’s exports will likely return to their pre-coronavirus growth path, including a gradual loss of market share to other countries.

    Federal Reserve Bank of Boston

    Federal Reserve Bank of Boston Provides Updated Main Street Lending Program Overview for Nonprofit Borrowers

    October 15, 2020

    The Federal Reserve Bank of Boston posted a short overview document for potential nonprofit borrowers under the Main Street Lending Program, explaining the core terms of the program and the eligibility criteria.

    Office of the Comptroller of the Currency

    Regulatory Capital Rule: Temporary Changes to and Transition for the Community Bank Leverage Ratio Framework

    October 15, 2020

    The Office of the Comptroller of the Currency, along with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, published a final rule in the Federal Register  that adopts without change two interim final rules: “Temporary Changes to the Community Bank Leverage Ratio Framework” and “Transition for the Community Bank Leverage Ratio Framework.” The final rule implements a temporary change to the community bank leverage ratio (CBLR) framework, pursuant to the CARES Act, and provides a graduated increase from the temporary 8% CBLR requirement as established under the CBLR final rule published in 2019. The final rule applies to qualifying community banks with less than $10 billion in total consolidated assets that meet other prudential criteria and opt into the CBLR framework. The final rule is effective November 9, 2020.

    Consumer Financial Protection Bureau

    CFPB Partners with Pro Linebacker Brandon Copeland to Host a Virtual Town Hall on Managing Money During the COVID-19 Pandemic

    October 15, 2020

    Consumer Financial Protection Bureau Director Kathleen L. Kraninger and Brandon Copeland, pro linebacker and University of Pennsylvania Professor, will host a virtual town hall to discuss how people can better manage their money during tough times. The event, titled “Pressure Creates Diamonds: Money Management during Coronavirus,” will be held on Tuesday, October 27, 2020, from 7-8 p.m. Eastern.

    Federal Housing Finance Agency

    Foreclosure Prevention, Refinance, and FPM Report — July 2020

    October 15, 2020

    The Federal Housing Finance Agency released its Foreclosure Prevention, Refinance, and FPM Report for July 2020. According to the report, Fannie Mae and Freddie Mac (the Enterprises) completed 230,198 foreclosure prevention actions in July, bringing the total to 4,916,088 since the start of the conservatorships in September 2008. Over half of these actions have been permanent loan modifications. Additionally, beginning in July, the Enterprises offered payment deferrals to 108,492 borrowers who have completed a COVID-19 related forbearance plan, or who have a confirmed but resolved COVID-19 financial hardship.

    Department of Labor

    DOL Releases Unemployment Insurance Weekly Claims Report Update

    October 15, 2020

    The U.S. Department of Labor released its Unemployment Insurance Weekly Claims Report Update, which found that in the week ending October 10, the advance figure for seasonally adjusted initial claims was 898,000, an increase of 53,000 from the previous week’s revised level. The previous week’s level was revised up by 5,000 from 840,000 to 845,000. The 4-week moving average was 866,250, an increase of 8,000 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 857,000 to 858,250.

  • Daily Financial Regulation Update -- Thursday, October 15, 2020

    by
    FedACTion Task Force
    | Oct 15, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    U.S. Department of the Treasury

    Joint IMFC and Development Committee Statement by Secretary Steven T. Mnuchin

    October 14, 2020

    U.S. Department of the Treasury Secretary Steven T. Mnuchin released a joint International Monetary and Financial Committee and Development Committee statement focusing on the response and the continued role of the International Monetary Fund and the World Bank to the COVID-19 pandemic.

    Federal Reserve Board

    Remarks by Vice Chair for Supervision Randal K. Quarles at the Hoover Institution on Federal Reserve’s Response to COVID-19

    October 14, 2020

    Randal K. Quarles, Vice Chair for Supervision for the Board of Governors of the Federal Reserve System (Federal Reserve), gave remarks at the Hoover Institution about the economic situation, monetary policy and actions that the Federal Reserve has taken in 2020 to help ensure that the banking system remains a source of strength during the recovery from the COVID-19 pandemic.

    Speech by Vice Chair Richard H. Clarida on U.S. Economic Outlook and Monetary Policy

    October 14, 2020

    Richard H. Clarida, Vice Chair for the Board of Governors of the Federal Reserve System (Federal Reserve), gave a speech at the 2020 Annual Membership Meeting of the Institute of International Finance titled “U.S. Economic Outlook and Monetary Policy” about the current economic situation and outlook, and the September 2020 Federal Open Market Committee changes to the Federal Reserve’s policy statement and the new monetary policy framework.

    Federal Reserve Bank of Boston

    Federal Reserve Bank of Boston Announces Webinar for Prospective Main Street Lending Program Borrowers

    October 14, 2020

    The Federal Reserve Bank of Boston announced a webinar for potential borrowers under the Main Street Lending Program to be held on October 21 at 2:00 p.m., Eastern.

    Department of Housing and Urban Development

    Opportunities Exist to Improve HUD’s Communication to Renters about Eviction Protections during COVID-19

    October 13, 2020

    As part of the Office of Inspector General’s (OIG) effort to provide oversight of the U.S. Department of Housing and Urban Development’s (HUD) relief efforts provided by the CARES Act, the OIG reviewed HUD’s communication to renters regarding the eviction moratorium found in Section 4024 of the CARES Act. The OIG found that HUD provided critical information to many renters through its website and published guidance. However, the OIG identified several aspects of HUD’s communication to renters on its website and published guidance that could be strengthened. 

    Federal Housing Administration

    FHA Launches FHA Catalyst Electronic Multifamily Application Submission Capabilities to Support Lenders during COVID-19

    October 14, 2020

    The Federal Housing Administration (FHA) announced the availability of the first module on its FHA Catalyst technology platform for multifamily lenders doing business with the FHA. The FHA Catalyst: Multifamily Applications module will allow eligible multifamily lenders to electronically submit applications for FHA insurance on multifamily properties. The new capability supports lenders in providing FHA-insured mortgage financing while working remotely because of the COVID-19 pandemic.

  • Recent CFAA Decision Deepens Circuit Split; SCOTUS Resolution on the Horizon

    by
    John Michels
    | Oct 14, 2020

    Last month, the Sixth Circuit ruled that the Computer Fraud and Abuse Act (“CFAA”) does not apply to employees who misuse company data that they were authorized to obtain. The decision, Royal Truck & Trailer Sales v. Mike Kraft et al., deepens a decade-long circuit split over whether the CFAA applies to employees who violate company policies, but the Supreme Court may be set to resolve the split this term.

    The Royal case involves two former employees of Royal Truck & Trailer (“Royal”), whom Royal hired as part of the company’s sales team. Both individuals received a company handbook which, among other things, prohibited the “unauthorized use, retention, or disclosure” of Royal’s resources or property. At some point, the two individuals resigned from Royal and began working for one of Royal’s competitors. Meanwhile, Royal discovered that the individuals had forwarded confidential company sales information to their personal email accounts prior to their resignation.

    Royal filed suit in the Eastern District of Michigan, alleging that the two former employees had “exceeded” their “authorized access” to company information by using it in violation of company policy, and therefore had violated the CFAA. When the district court held that the CFAA did not apply to the employees’ behavior, Royal appealed to the Sixth Circuit.

    The Sixth Circuit affirmed the district court, holding that individuals who are authorized to access a computer do not exceed their authorized access by violating an employer’s restrictions on how that information may or may not be used. The court explained that the provisions of the CFAA demonstrate that the statute is aimed at preventing computer hacking, rather than the misuse of corporate information. In addition, because the CFAA has both criminal and civil implications, the court noted that any decision to the contrary would have “the odd effect of allowing employers, rather than Congress, to define the scope of criminal liability by operation of their employee computer-use policies.”

    The decision highlights a longstanding circuit split on the issue of whether the CFAA applies to employees who violate employment policies. Through its decision in Royal, the Sixth Circuit joins the Second, Fourth, Sixth, and Ninth Circuits in adopting a narrow interpretation of the statute—one where the CFAA does not reach an employee’s violation of company policies. In contrast, the First, Fifth, Seventh, Eight, and Eleventh Circuits have rejected that interpretation, holding instead that the CFAA’s prohibition on “exceed[ing] authorized access” encompasses situations where an employee has authorization to access company information, but then uses that information in violation of company policy.

    The Royal decision follows in the wake of the Supreme Court’s grant of certiorari in Van Buren v. United States, another case that raises questions on the CFAA’s applicability to employees who misuse company information. That case, which may resolve the circuit split on the issue, is set for oral argument on November 30, 2020.
  • California DOJ Announces a Third Set of Proposed Modifications to the CCPA Regulations

    by
    Bianca Ponziani
    | Oct 14, 2020

    The California Department of Justice (“DOJ”) announced this week a third set of proposed modifications to the California Consumer Privacy Act (“CCPA”) regulations last updated in August 2020, as we reported here. The following proposals are of particular note:

    • Offline notice of the right to opt-out (proposed § 999.306(b)(3)).

      Businesses that collect consumers’ personal information offline (e.g., in a brick-and-mortar store) must provide consumers offline notice of their right to opt out of the sale of their personal information—for example, via signage referring consumers to an online notice, placed in the location where their personal information is collected.

    • Straightforward mechanism to opt-out (proposed § 999.315(h)).

      Businesses must provide a simple, streamlined method for consumers who wish to opt out of the sale of their personal information. This means minimal steps from the point of request (the moment the consumer clicks the “Do Not Sell My Personal Information” link) to the completion of that request. Businesses must not require consumers to provide more personal information than necessary to fulfill the request, nor make consumers scroll through a privacy policy in order to locate the mechanism for submitting the request.

    • Proof of authorized agent (proposed § 999.326(a)).

      Businesses may require a consumer’s authorized agent to provide proof that the consumer has permitted the agent to submit a “request to know” or a “request to delete” (as those terms are respectively defined in the regulations) on their behalf.

    • Clarification for businesses selling the personal information of minors (proposed § 999.332(a)).

    Businesses that have actual knowledge that they sell the personal information of consumers under the age of 13 or between the ages of 13 and 16 (or both) must ensure that their privacy policy articulates the requirements listed in sections 999.330 and/or 999.331.

    A redline of the proposed changes can be consulted here. The California DOJ is accepting written comments to the proposed regulations until October 28, 2020.

    As the CCPA continues to evolve (for example, just last week we reported on the extension of the CCPA’s HR and B2B communications carve-outs contemplated by AB-1281), we will continue to report on important clarifications and modifications.

  • Daily Financial Regulation Update -- Wednesday, October 14, 2020

    by
    FedACTion Task Force
    | Oct 14, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    SBA and Treasury Release New Set of Frequently Asked Questions Addressing Loan Forgiveness

    October 13, 2020

    The U.S. Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, has provided a new set of frequently asked questions (FAQs) and guidance to address borrower and lender questions concerning forgiveness of Paycheck Protection Program loans, as provided for under the CARES Act and amended by the Paycheck Protection Program Flexibility Act. The FAQs are divided into five categories: (i) General Loan Forgiveness; (ii) Loan Forgiveness Payroll Costs; (iii) Loan Forgiveness Nonpayroll Costs; (iv) Loan Forgiveness Reductions; and (v) Economic Injury Disaster Loans.

    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.

    Federal Agencies

    Federal Reserve Bank of New York

    Consumers’ Labor Market and Spending Expectations Improve

    October 13, 2020

    The Federal Reserve Bank of New York’s Center for Microeconomic Data released the September 2020 Survey of Consumer Expectations, which shows improvements in labor market and spending expectations, as well as less pessimistic views about households’ expected financial situation. Home price growth expectations returned to their pre-COVID-19 levels, and debt delinquency expectations remained low. In contrast, year-ahead household income expectations remain weak compared to the pre-COVID-19 period. Median inflation expectations remained unchanged at the short-term horizon, while it declined at the medium-term horizon. Uncertainty and disagreement about future inflation remain elevated.

    Bank Liquidity Provision across the Firm Size Distribution

    October 13,2020

    The Federal Reserve Bank of New York has released a Staff Report titled “Bank Liquidity Provision across the Firm Size Distribution.” The authors investigate differences in the provision of bank liquidity across the range of firm sizes. Using supervisory data covering two-thirds of all commercial and industrial loans, including 50,000 small and medium enterprises (SMEs), they present five facts about differences in loan terms to large and small firms that reflect lender commitment to the former and discretion to the latter. The authors document that SMEs (i) obtain much shorter maturity credit lines than large firms; (ii) have less active maturity management and therefore frequently have expiring credit; (iii) post more collateral on both credit lines and term loans; (iv) have higher utilization rates in normal times; and (v) pay higher spreads, even conditional on other firm characteristics.

    Estimates on Underlying Inflation Gauge

    October 13, 2020

    The Federal Reserve Bank of New York has released information regarding the Underlying Inflation Gauge, which captures sustained movements in inflation from information contained in a broad set of price, real activity, and financial data. For September 2020, trend CPI inflation is estimated to be in the 1.3% to 2.2% range, which is similar to the currently estimated August 2020 range of 1.3% to 2.1%. The COVID-19 outbreak continues to impact data collection for the CPI release.

    Blog Post: How Have Households Used Their Stimulus Payments and How Would They Spend the Next?

    October 13, 2020

    The Federal Reserve Bank of New York’s Liberty Street Economics blog issued a post titled “How Have Households Used Their Stimulus Payments and How Would They Spend the Next?” The authors examine how households used economic impact payments, a large component of the CARES Act that directed stimulus payments to many Americans to help offset the economic fallout from the Coronavirus pandemic. The analysis shows that, as of the end of June 2020, a relatively small share of stimulus payments, 29%, was used for consumption, with 36% saved and 35% used to pay down debt. Reported expected uses for a potential second stimulus payment suggest an even smaller marginal propensity to consume, with households expecting to use more of the funds to pay down their debts.

    Financial Crimes Enforcement Network

    FinCEN Issues Advisory on Unemployment Insurance Fraud during the COVID-19 Pandemic

    October 13, 2020

    The Financial Crimes Enforcement Network issued an advisory to alert financial institutions to unemployment insurance (UI) fraud observed during the COVID-19 pandemic. The advisory contains descriptions of COVID-19 related UI fraud, associated financial red flag indicators and information on reporting suspicious activity.

    FINRA

    U.S. Investors Unfazed by Pandemic-Related Market Volatility: African American and Hispanic Investors Showed Greatest Increase in Interest in Investing

    October 13, 2020

    According to a new research study by the Financial Industry Regulatory Authority (FINRA) Foundation and NORC at the University of Chicago, despite dramatic market volatility related to the COVID-19 pandemic during early 2020, investor optimism about the stock market remained high. One in five Americans indicated an increased interest in investing. Low levels of investment knowledge underscore the need for additional investment education opportunities, especially among African Americans and Hispanics, the research shows.

    International

    European Commission

    European Commission Statement on the Coordination of Measures Restricting Free Movement in the European Union related to the Coronavirus Pandemic

    October 13, 2020

    European Union (EU) ministers have reached an agreement that will provide more clarity and predictability on measures that restrict free movement due to the coronavirus pandemic, following the proposal of the European Commission on September 4, 2020. All information about travelling in the EU will be available on the “Reopen EU” platform, where the common map published regularly by the European Centre for Disease Prevention and Control will also be cross-referenced.

    State Aid: Commission Prolongs and Expands Temporary Framework to Further Support Companies Facing Significant Turnover Losses

    October 13, 2020

    The European Commission has decided to prolong and extend the scope of the State Aid Temporary Framework adopted on March 19, 2020 to support the economy in the context of the coronavirus outbreak. All sections of the Temporary Framework are prolonged for six months until June 30, 2021, and the section to enable recapitalization support is prolonged for three months, until September 30, 2021.

  • Daily Financial Regulation Update -- Tuesday, October 13, 2020

    by
    FedACTion Task Force
    | Oct 13, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Federal Reserve Bank of New York

    Weathering the Storm: Who Can Access Credit in a Pandemic?

    October 13, 2020

    The Federal Reserve Bank of New York’s (New York Fed) Liberty Street Economics blog issued a post titled “Weathering the Storm: Who Can Access Credit in a Pandemic?” According to the post, credit enables firms to weather temporary disruptions in their business that may impair their cash flow and limit their ability to meet commitments to suppliers and employees. The onset of the COVID recession sparked a massive increase in bank credit, largely driven by firms drawing on pre-committed credit lines. In the post, based on a recent Staff Report released by the New York Fed, the authors investigate which firms were able to tap into bank credit to help sustain their business over the ensuing downturn.

    International

    European Commission

    Coronavirus Dashboard: EU Cohesion Policy Response to the Coronavirus Crisis

    October 12, 2020

    The European Commission (EU) issued a release on the EU Cohesion Policy response to the COVID-19 crisis. It announced the first provisional results of the implementation of the Coronavirus Response Investment Initiative and Coronavirus Response Investment Initiative Plus. In total: €4.1 billion has been reallocated towards healthcare to purchase vital machinery and personal protective equipment; €8.4 billion has been mobilized through issuing grants, loans and a series of personalized financial instruments to support the economy and, in particular, Small and Medium enterprises to adapt to the crisis; and approximately €1.4 billion has been channeled through the European Social Fund to support individuals and families and save jobs.

    Bank of England

    Bank of England Analysis: How will Spare Capacity in the Economy Affect Inflation?

    October 12, 2020

    The Bank of England has shared a post summarizing its internal analysis on how spare capacity in the economy will affect inflation. According to the post, the UK economy is likely to have spare capacity as a result of the COVID-19 pandemic. A number of factors will influence how that spare capacity affects inflation, including the frequency of price changes across different sectors.

    UK Financial Conduct Authority

    FCA Regulation of Consumer Credit – During the Pandemic and Beyond

    October 13, 2020

    Nisha Arora, Director of Consumer and Retail Policy at the Financial Conduct Authority (FCA), delivered a speech at the Finance & Leasing Association Annual Regulation Conference titled “FCA Regulation of Consumer Credit – During the Pandemic and Beyond.” Ms. Arora shared her reflections on (i) why credit markets have been and remain a priority for the FCA; (ii) what outcomes the FCA considers to be critical to well-functioning credit markets; and (iii) how the FCA’s work in past years and recent months has reflected this priority, and will continue to do so going forward.

    Market Abuse in a Time of Coronavirus

    October 12, 2020

    Julia Hoggett, Director, Market Oversight at the Financial Conduct Authority (FCA) delivered a speech at the City Financial Global event titled “Market Abuse in a Time of Coronavirus.” Ms. Hoggett’s speech focused on risks created by operating during the time COVID-19, the FCA’s expectation of firms and the critical role that all parts of market infrastructure have in keeping markets clean, including the role of technology and data.

  • This Week in Washington for October 12, 2020

    by
    Dina Ellis
    | Oct 12, 2020

    THE BIG PICTURE

    For the latest advice for businesses dealing with the coronavirus, be sure to check out Paul Hastings’ targeted alert series: https://www.paulhastings.com/coronavirus

    The President was discharged from Walter Reed Medical Center on Monday evening, and returned to the White House to continue his recovery from Covid-19. The President was eager to get back on the campaign trail, despite concerns over his health and the potential for further spread, and over the weekend addressed a crowd of supporters on the South Lawn. The case count in the White House continued to rise, with several aides and residence staff members testing positive, including top aide Stephen Miller and press secretary Kayleigh McEnany. The President urged Americans via Twitter to not “be afraid of Covid” adding “don't let it dominate your life,” and touted an experimental treatment he had received as a “cure.” This message stood in contrast to the rising death toll, which approached 215,000 over the weekend, and surging infection rates in several parts of the country which have sparked concern among public health officials - particularly as the weather begins to cool and outdoor activities become less feasible.

    Vice President Mike Pence and Senator Kamala Harris faced off on Wednesday evening in their first and only debate of the campaign. The evening was a more civil affair than the Presidential debate two weeks prior, as the pair sparred over court packing, the administration’s coronavirus response, and the future of the Affordable Care Act. The President’s Covid-19 diagnosis complicated planning for the second Presidential debate scheduled to take place on the 15th. The President refused to participate in a virtual format, lobbying for the event to be held in-person as planned, while the Biden camp refused that demand as a safety precaution, given the uncertainty around the President’s illness. In the end the Commission canceled the debate, and the President and Biden will face off for the final time on October 22nd.

    On Tuesday the President announced he was ending negotiations over a coronavirus relief package until after the election. The move caused the stock market to plummet and drew blowback from vulnerable Republican incumbents, as small businesses and unemployed Americans continue to suffer. Later in the week the administration reversed course, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin speaking several times to discuss a potential deal. On Friday, the President reportedly approved a US$1.8T proposal that includes enhanced unemployment benefits, though the price tag may be a non-starter for some Senate Republicans.

    Other highlights of last week include:

    • An additional 840,000 Americans filed for unemployment benefits.
    • Several members of the Joint Chiefs of Staff are in quarantine after coming in contact with Coast Guard vice commandant, Adm. Charles Ray. The Joint Chiefs projected confidence in their remote capabilities, saying “there is no change to the operational readiness or mission capability of the U.S. Armed Forces.”
    • The FBI thwarted a plot by a militant group to kidnap Michigan Governor Gretchen Whitmer. The scheme appeared to be related to Whitmer’s imposition of coronavirus restrictions.

    LAST WEEK ON THE HILL

    Democrats Criticize Proposed Labor Department Rule Weakening Tool to Advance Financial Interests of Workers and Retirees: Sen. Sherrod Brown (D-OH), Sen. Patty Murray (D-WA), Rep. Bobby Scott (D-VA) and Rep. Maxine Waters, led several of their Democratic colleagues in submitting a comment letter to the Department of Labor criticizing its proposed rule to limit fiduciaries’ ability to use proxy voting, a key tool to further the financial interests of the workers and retirees they serve. The Members argued, “In practice, this proposal does the opposite of protecting retirees – it decreases the value of retirement plans’ investments by discouraging fiduciaries from using a key tool to fight for the financial interests of the workers and retirees they serve. Amid its summer regulatory ‘tsunami,’ the Department has once again overlooked its statutory and administrative obligations for rulemaking. This blatant attempt at disenfranchising ERISA-governed plans is ill-advised, unjustified, and unnecessary.”

    Leading Democrats Raise Questions about Trump Administration’s Export of Potential Missile Materials to China: On Monday, a group of leading national security Democrats raised an alarm over an approval by the Trump Administration to export over 227 tons of sensitive material critical to building missiles to the People’s Republic of China. In a new letter to Secretary of Commerce Wilbur Ross, Senate Foreign Relation Committee Ranking Member Bob Menendez (D-NJ), Minority Leader Chuck Schumer (D-NY), Ranking Member of the Senate Banking Committee Sherrod Brown (D-OH), Ranking Member of the Senate Armed Services Committee Jack Reed (D-RI), and Senate Democratic Whip Dick Durbin (D-IL) demanded answers and justification concerning the Department’s decision to approve the exportation of 455,000 pounds of fine grain bulk graphite to the People’s Republic of China and the nature of the transaction. On September 29, Secretary Ross sent Congress a letter to certify the sale – as required by law given the grave national security issues entailed – but his certification failed to provide any detail about or justification for the proposed export.

    Warren Asks the Largest Financial Institutions How They Are Assessing and Mitigating Risks Resulting from the COVID-19 Induced Recession: On Wednesday, Sen. Elizabeth Warren (D-MA) sent letters to the largest banks – those with over US$250B in total consolidated assets – requesting information on how these institutions are assessing and mitigating risks resulting from the COVID-19 pandemic. Senator Warren raised concerns about the Federal Reserve Board of Governors’ lack of transparency about methods and findings of its recent stress tests and noted that banks may not be prepared for the economic fallout in the coming months, especially if households and businesses don’t receive needed relief from Congress.

    Warren, Murray, Peters Call for GAO to Investigate Trump Administration Interference in FDA and CDC Coronavirus Decisions: On Friday, Senators Elizabeth Warren (D-MA), Patty Murray (D-WA), and Gary Peters (D-MI), sent a letter to the Government Accountability Office (GAO) calling for an immediate investigation to understand the extent of undue political influence at the Centers For Disease Control and Prevention (CDC) and the Food and Drug Administration (FDA) and whether this interference has violated the agencies' scientific integrity and communication policies. “The CDC and FDA’s independence as scientific agencies is crucial to safeguarding the public health and saving lives,” the Senators wrote. “These agencies must be able to develop, review, and disseminate public health data, guidelines, and other information that are based on science, facts, and medical principles-and not the political imperatives and moods of a president and his advisors. But the Trump Administration has reportedly pressured the CDC and FDA throughout the COVID-19 pandemic, repeatedly applying political pressure and imposing orders on career scientists that undermine the agencies' credibility and independence.”

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 8324: Rep. Ted Budd (R-NC) introduced H.R. 8324, the Make PPE in America Act, which would provide for domestic sourcing of personal protective equipment.

    H.R. 8533: Rep. Katherine Clark (D-MA) introduced H.R. 8533, which would provide an exception to the volume cap requirement for private activity bonds used to finance the preservation, improvement, or replacement of certain Federally assisted buildings.

    H.R. 8536: Rep. Mike Gallagher (R-WI) introduced H.R. 8536, which would amend the Fair Credit Reporting Act to delay the reporting of medical debt by consumer reporting agencies.

    H.R. 8540: Rep. John Katko (R-NY) introduced H.R. 8540, which would require the Secretaries of Housing and Urban Development, Agriculture, and Health and Human Services to conduct a study of how housing design can help prevent the spread of communicable diseases.

    THIS WEEK ON THE HILL

    Senate Judiciary Committee to Hold Hearings on Barrett Nomination: The Senate Judiciary Committee is set to hold four days of hearings on the nomination of Judge Amy Coney Barrett to the vacant seat on the Supreme Court. Barrett’s opening statement was published over the weekend, in which she praised the late Justice Antonin Scalia for whom she clerked, and expressed the view that “The policy decisions and value judgments of government must be made by the political branches elected by and accountable to the People. The public should not expect courts to do so, and courts should not try.”

    THE REGULATORS

    Federal Reserve Warns Recovery Dependent on More Government Support: The Federal Reserve Board released the minutes from their September 15-16 meeting, which revealed “many participants noted that their economic outlook assumed additional fiscal support and that if future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated.” Later in the week, Federal Reserve Chairman Jerome Powell said it would be a tragedy for the economy if government support was allowed to lapse, and argued Congress should err on the side of caution as the risks of pouring too much stimulus into the economy were far lower than the risk of not doing enough, which “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

    DOJ Publishes Cryptocurrency Enforcement Framework: On Thursday, Attorney General Bill Barr announced the release of “Cryptocurrency: An Enforcement Framework,” a publication produced by the Attorney General’s Cyber-Digital Task Force. The Framework provides a comprehensive overview of the emerging threats and enforcement challenges associated with the increasing prevalence and use of cryptocurrency; details the important relationships that the Department of Justice has built with regulatory and enforcement partners both within the United States government and around the world; and outlines the Department’s response strategies. In a statement, Barr noted that “Cryptocurrency is a technology that could fundamentally transform how human beings interact, and how we organize society. Ensuring that use of this technology is safe, and does not imperil our public safety or our national security, is vitally important to America and its allies.”

    SEC Updates Regulatory Framework for Fund of Funds Arrangements: On Wednesday, the SEC voted to adopt a new rule and related amendments designed to put in place a comprehensive regulatory framework for fund of funds arrangements. Chairman Clayton celebrated the move, saying, “the framework adopted today will provide flexibility to fund managers to allocate and structure investments efficiently, without the costs and delays of seeking individualized exemptive orders, as long as the arrangements satisfy a number of conditions designed to enhance investor protection.”

    SEC Proposes Conditional Exemption for Finders Assisting Small Businesses with Capital Raising: On Wednesday, the SEC voted to propose a new limited, conditional exemption from broker registration requirements for “finders” who assist issuers with raising capital in private markets from accredited investors. If adopted, the proposed exemption would permit natural persons to engage in certain limited activities involving accredited investors without registering with the Commission as brokers. The proposed exemption seeks to assist small businesses to raise capital and to provide regulatory clarity to investors, issuers, and the finders who assist them.

    SEC to Hold National Compliance Outreach Seminar for Investment Companies and Investment Advisers Virtually: On Wednesday, the SEC announced that it has rescheduled its compliance outreach program's national seminar for investment companies and investment advisers to November 19, 2020. This program is intended to help Chief Compliance Officers (CCOs) and other senior personnel at investment companies and investment advisory firms enhance their compliance programs for the protection of investors. The November program will be offered as a live webcast – both speakers and attendees will be participating in the program remotely.

    Treasury Sanctions Eighteen Major Iranian Banks: On Thursday, the Secretary of the Treasury, in consultation with the Secretary of State, identified the financial sector of the Iranian economy pursuant to section 1(a)(I) of Executive Order 13902, which authorizes Treasury to sanction any Iranian financial institution. Subsequently, the Office of Foreign Assets Control sanctioned eighteen major Iranian banks. As part of this action, OFAC sanctioned sixteen Iranian banks for operating in Iran’s financial sector and one bank for being owned or controlled by a sanctioned Iranian bank. Additionally, the action included the designation of an Iranian military-affiliated bank under Treasury’s counter-proliferation authority.

    CFTC Unanimously Approves a Final Rule Amending Form CPO-PQR: On Tuesday at its open meeting, the CFTC unanimously approved a final rule adopting amendments to Form CPO-PQR for commodity pool operators (CPOs). The amendments to Form CPO-PQR (1) eliminate existing Schedules B and C of the form, except for the Pool Schedule of Investments; (2) amend the information requirements and instructions to request Legal Entity Identifiers (LEIs) for commodity pool operators and their operated pools that have them, and to delete questions regarding pool auditors and marketers; and (3) make certain other changes due to the rescission of Schedules B and C, including the elimination of all existing reporting thresholds.

    CFTC and the Office of Financial Research Sign Memorandum of Understanding to Allow Information Sharing: On Tuesday, CFTC Chairman Heath Tarbert and Office of Financial Research Director Dino Falschetti signed a Memorandum of Understanding that establishes a framework for the CFTC to share with OFR information and data reported on Form CPO-PQR, which is filed with the CFTC by CFTC-registered commodity pool operators (CPOs). The MOU also confirms both agencies’ commitment to working together to fulfill their statutory and regulatory mandates. “Collaboration is vital to monitoring risk across the financial system. No single regulator has all of the data required for a complete picture,” said Falaschetti, “This agreement will provide the OFR with important data to assist the FSOC in identifying and responding to risks to financial stability.”

    CFTC Posts Record-Breaking Enforcement Year: On Tuesday, the CFTC announced a record-breaking year in the agency’s Division of Enforcement. The agency highlighted that during Fiscal Year 2020, which closed on September 30, 2020, it the Commission had: Filed more enforcement actions (113) than any other year in the agency’s history; Approved a case imposing the largest monetary relief in the agency’s history, with a $920 million resolution for violations relating to manipulation and spoofing; Filed an action in coordination with more state authorities – 30 states in total – than ever, alleging more than $180 million defrauded from elderly victims; Aggressively pursued fraud occurring during the COVID-19 pandemic, at a time when victims may be particularly vulnerable, filing 29 associated cases since a national emergency was declared on March 13, 2020; and Continued its emphasis on coordination and parallel actions with criminal authorities and its regulatory partners.

    LabCFTC Opens Registration for October 21 “Empower Innovation 2020” Event: On Thursday, the CFTC opened registration and released the agenda for LabCFTC’s Empower Innovation 2020 session, “Regulation and Innovation Re-imagined.” The October 21st session is the second of three interactive virtual events hosted by LabCFTC to facilitate a dialogue on cutting-edge fintech innovation among innovators, regulators, market participants, and the public. Participants will engage with leaders from some of the nation’s key regulators to discuss their views on the role technology plays in fostering innovation and best practices for collaboration among policymakers and innovators.

    CFPB Report Finds Continued Decline in the Market for Certain Kinds of College Credit Cards: On Thursday, the CFPB issued a report on agreements between credit card issuers and institutions of higher education, as well as certain organizations affiliated with such institutions. The report finds that in 2019 the number of total agreements in effect, as well as the number of accounts open under the agreements, continues a general trend of decline. Overall, between 2009 and 2019 the number of agreements in effect, year-end open accounts, and payments by issuers all declined by more than two-thirds. Agreements with alumni associations continue to represent the large majority of agreements, accounts, and payments by issuers.

    FDIC to Host Inaugural Meeting of Advisory Committee of State Regulators: On Thursday, the FDIC announced that it would convene the first meeting of its Advisory Committee of State Regulators (ACSR) on Wednesday, October 14th. The FDIC’s advisory committee members will discuss and receive updates on a range of policy issues regarding the regulation of state-chartered financial institutions throughout the U.S. and its territories. The inaugural meeting’s agenda includes a discussion of state banking conditions, financial technology and an update on efforts to expand financial inclusion.

    COMINGS AND GOINGS AT THE AGENCIES

    CFTC Enforcement Director James McDonald to Depart Agency: On Tuesday, the CFTC announced that Division of Enforcement Director James McDonald would depart the agency, effective October 8, 2020. Mr. McDonald has served as Director of Enforcement since April of 2017. Vincent McGonagle, Principal Deputy Director of the Division of Enforcement, will serve as Acting Director.

    THE COURTS

    First Openly Gay Judge Nominated to California Supreme Court: On Monday, California Governor Gavin Newsom announced the nomination of Judge Martin Jenkins to serve on the state’s Supreme Court. If appointed, Jenkins would become the first openly gay man to serve on the court, and the first Black man to sit on the court in nearly three decades.

    OTHER NOTEWORTHY ITEMS

    Supreme Court Denies Challenge to Pennsylvania Shutdown Order: On Monday the Supreme Court declined to hear a challenge to Pennsylvania Governor Tom Wolf’s decision to close all non-life-sustaining businesses as a response to the outbreak of the pandemic. The decision was the second time the high court had decided not to review the case, having first decline to review an emergency petition in May.

    Trump Campaign Loses Ballot-Counting Challenge in New Jersey: On Tuesday, a federal judge in New Jersey denied the Trump campaign’s challenge to the state’s plan to accept mail-in ballots up to two days after Election Day. The judge ruled that to do so would create a disincentive to vote by absentee ballot in the midst of a pandemic.

    Supreme Court Rejects Effort to Block Montana Mail Ballots: On Thursday, the Supreme Court refused to block Montana election officials from sending mail-in ballots. State Republican officials had contended that the move by Governor and Senate candidate Steve Bullock to allow counties to send out the ballots as a coronavirus safety precaution violated a U.S. constitutional provision.

    ***
    Paul Hastings’ Government Relations team is monitoring these issues. We help our clients craft strategies to address federal legislative and regulatory matters. Please reach out to us if your organization needs assistance with congressional or regulatory relations.

  • Daily Financial Regulation Update -- Saturday, October 10, 2020

    by
    FedACTion Task Force
    | Oct 10, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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. House of Representatives

    Committee on Small Business

    Velázquez Calls on SBA to Provide COVID-19 Relief Program Data to Government Watchdog

    October 8, 2020

    Congresswoman Nydia M. Velázquez (D-NY), Chairwoman of the House Committee on Small Business, requested that the U.S. Small Business Administration (SBA) release data related to COVID-19 relief programs. In her letter, Chairwoman Velázquez asked that the SBA comply with data requests from the Government Accountability Office related to the SBA’s COVID-19 response programs, specifically the Economic Injury Disaster Loan Program.

    Federal Agencies

    Department of the Treasury

    SBA and Treasury Announce Simpler PPP Forgiveness for Loans of $50,000 or Less

    October 8, 2020

    The U.S. Small Business Administration, in consultation with the U.S. Department of the Treasury, released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less.

    Conference of State Bank Supervisors

    CSBS Senior Economist Publishes Blog Post on Bankers’ Uncertainty in the Context of COVID-19

    October 8, 2020

    In a blog post titled “2020 Hindsight is Uncertainty,” Thomas F. Siems, Ph.D., Senior Economist and Director of Research at the Conference of State Bank Supervisors (CSBS), stated that community bankers’ responses to CSBS’ Community Bank Sentiment Index (CBSI) survey for the third quarter of 2020 “express more uncertainty now than ever before.” In his post, Siems states the CBSI shows that the upsurge in the uncertainty index is driven primarily by an increase in regulatory burden uncertainty.

    Consumer Financial Protection Bureau

    Deadline Extended to Claim Stimulus Funds

    October 8, 2020

    The Consumer Financial Protection Bureau issued a notice that the IRS has extended the deadline for individuals to claim their Economic Impact Payment. The IRS’ Non-Filers tool will now be available through November 21, 2020.  

    International

    Bank of England

    Bank Issues Market Notice Providing Updates on CCFF

    October 9, 2020

    The Bank of England issued a Market Notice providing an update on how Covid Corporate Financing Facility (CCFF) issuers’ credit quality will be monitored and reviewed in advance of the closure of the CCFF.

  • Daily Financial Regulation Update -- Friday, October 9, 2020

    by
    FedACTion Task Force
    | Oct 09, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Department of the Treasury

    SBA and Treasury update FAQs on Paycheck Protection Program

    October 7, 2020

    The U.S. Small Business Administration and the U.S. Department of the Treasury published Question 52 to the Frequently Asked Questions for the Paycheck Protection Program (PPP), which asks whether lenders and borrowers are required to modify promissory notes used for PPP loans to reflect the extended deferral periods introduced under the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act). In response, the SBA confirmed that lenders are not required to make a formal modification to the promissory note as the extension of the deferral period under the Flexibility Act automatically applies to all PPP loans. Accordingly, lenders are required to give immediate effect to the statutory extension and should notify borrowers of the change to the deferral period.

    Federal Reserve Bank of Boston

    Boston Fed President Rosengren Delivers Speech on Implications for Recovery from the Pandemic

    October 8, 2020

    Federal Reserve Bank of Boston President Eric Rosengren delivered a speech at Marquette University regarding the implications for recovery of the COVID-19 pandemic. Rosengren discussed how the state of the economy as it encounters a shock or downturn – and the health of the financial system – can play important roles in recessionary dynamics, and how the recessionary burden is spread across the economy. Increased risk-taking in the low-interest-rate environment that preceded the current economic downturn will likely make the recovery from the pandemic more difficult.

    Federal Deposit Insurance Corporation

    Chairman McWilliams Delivers Remarks at Single Resolution Board’s Annual Conference

    October 8, 2020

    Federal Deposit Insurance Corporation (FDIC) Chairman Jelena McWilliams delivered remarks at the Single Resolution Board’s Annual Conference: “Resolution Readiness: Adapting to our Uncertain World.” Chairman McWilliams discussed lessons learned during the COVID-19 pandemic, including the importance of using capital and liquidity buffers wisely. Because banks had built up strong capital and liquidity reserves during the past decade, they have been able to help support the real economy through the ongoing COVID-19 crisis.

    Department of Labor

    DOL Releases Unemployment Insurance Weekly Claims Report Update

    October 8, 2020

    The U.S. Department of Labor released its Unemployment Insurance Weekly Claims Report Update, which found that in the week ending October 3, the advance figure for seasonally adjusted initial claims was 840,000, a decrease of 9,000 from the previous week’s revised level. The previous week’s level was revised up by 12,000 from 837,000 to 849,000. The 4-week moving average was 857,000, a decrease of 13,250 from the previous week’s revised average. The previous week’s average was revised up by 3,000 from 867,250 to 870,250.

    International

    Bank of England

    Bank of England Publishes Record of FPC Meeting on September 30

    October 8, 2020

    The Bank of England published the Financial Policy Summary and Record (Record) of the meeting of the Financial Policy Committee (FPC) on September 30, 2020. Members of the FPC discussed the risks faced by the UK financial system and assessed the resilience of the system to those risks.

    UK Financial Conduct Authority

    Executive Director Davidson Delivers Speech on Mortgages and the Coronavirus - Enabling Positive Consumer Outcomes

    October 8, 2020

    Jonathan Davidson, Executive Director of Supervision (Retail and Authorizations) of the Financial Conduct Authority (FCA) delivered a speech at the FCA’s Mortgage Forbearance Webinars. Davidson discussed the need to prioritize support for borrowers that are most at risk of harm and the FCA’s desire that firms ensure that more hands-on support is available for those that need it.

  • January 1, 2022, Extension of CCPA’s HR and B2B Carve-Outs Signed into Law

    by
    Behnam Dayanim and Bianca Ponziani
    | Oct 08, 2020

    On September 29, 2020, California Governor Gavin Newsom signed into law AB-1281, extending to January 1, 2022, the California Consumer Privacy Act of 2018 (“CCPA”) business-to-business (B2B) and employment-related communications carve-outs. Still, the bill will survive only if voters do not approve the California Privacy Rights and Enforcement Act of 2020 (“CPRA”), on the ballot in November’s statewide general election. If approved, the CPRA would both generally expand the CCPA’s obligations and further extend the two carve-outs contemplated by AB-1281 to January 1, 2023. For more information on AB-1281, please see our blog post here.

    Relatedly, on September 25, 2020, Governor Newsom signed into law AB-713, newly carving out from the CCPA medical research regulated by the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and, among other things, harmonizing the CCPA’s definition of de-identified patient data in accordance with HIPAA. The changes take effect immediately.

  • Daily Financial Regulation Update -- Thursday, October 8, 2020

    by
    FedACTion Task Force
    | Oct 08, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    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.

    Federal Agencies

    Treasury Deputy Secretary Muzinich Delivers Remarks on COVID-19 at Atlantic Council Geoeconomics Center

    October 7, 2020

    Justin Muzinich, Deputy Secretary of the U.S. Department of the Treasury, delivered remarks at the Atlantic Council’s Center for Geoeconomics, focusing on the United States’ and Europe’s responses to the COVID-19 pandemic, and several transatlantic policy areas in which Muzinich deemed cooperation essential, specifically investment security, cryptocurrency, sanctions and economic growth.

    Federal Reserve Board

    Federal Open Market Committee Meeting Minutes Released, Addressing Impact of COVID-19

    October 7, 2020

    The Board of Governors of the Federal Reserve System and the Federal Open Market Committee (FOMC) released the minutes of FOMC meeting held on September 15–16, 2020.

    Federal Reserve Board Issues August 2020 Consumer Credit Report Showing Impact of COVID-19

    October 7, 2020

    The Board of Governors of the Federal Reserve System issued its Consumer Credit Report for August 2020 highlighting the impacts of the ongoing COVID-19 pandemic on consumer credit.

    Federal Reserve Board Deputy Director Kiley Authors Paper on COVID-19 Recovery

    October 7, 2020

    Michael T. Kiley, Deputy Director of the Division of Financial Stability of the Board of Governors of the Federal Reserve System, authored a paper titled “Pandemic Recession Dynamics: The Role of Monetary Policy in Shifting a U-Shaped Recession to a V-Shaped Rebound”. In his paper, Deputy Director Kiley focused on the degree to which constraints on monetary policy may amplify the COVID-19 recession, and, the degree to which economic dynamics imply persistent declines in living standards following even purely transitory direct effects of the COVID-19 pandemic, and the degree to which monetary policy may mitigate these effects by stimulating investment to maintain productive capacity.

    Federal Reserve Bank of New York

    Federal Reserve Bank of New York President and CEO Williams Delivers Speech on New FOMC Framework

    October 7, 2020

    John C. Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, delivered a speech entitled “The Longer-Run Framework: A Look Ahead,” at the Hoover Institution Monetary Policy Virtual Series. In his speech, President and CEO Williams discussed the Federal Open Market Committee’s new monetary policy framework, in the context of the economic recovery from the COVID-19 pandemic.

    Federal Reserve Bank of New York Publishes Blog Post Examining Perceptions of COVID-19

    October 7, 2020

    The Federal Reserve Bank of New York published a Liberty Street Economics blog post (Post) entitled “Are People Overconfident about Avoiding COVID-19?” In the Post, the authors show that people view their personal risk of exposure to COVID-19 as significantly lower than the public’s risk of exposure, a gap the authors refer to as overconfidence.

    International

    Bank of England Prudential Regulation Authority

    PRA’s Credit Union Supervision Team Sends Letter to Directors of PRA-Regulated Credit Unions Concerning Regulatory Reporting Challenges Posed by COVID-19

    October 7, 2020

    The Bank of England’s Prudential Regulation Authority’s (PRA) Credit Union Supervision Team sent a letter to PRA-regulated credit unions reiterating messages on engagement with the PRA and regulatory reporting and confirming the PRA’s supervisory focus and priorities for credit unions in the current period.

  • Daily Financial Regulation Update -- Wednesday, October 7, 2020

    by
    FedACTion Task Force
    | Oct 07, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    U.S. Small Business Administration

    SBA Issues Guidance on PPP Loans and Changes of Ownership

    October 2, 2020

    The U.S. Small Business Administration released a procedural notice on the required procedures for changes of ownership of an entity that received Paycheck Protection Program funds.

    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. House of Representatives

    Committee on Financial Services

    Committee Democrats’ Legislation Included in Updated House COVID-19 Package

    October 5, 2020

    During floor debate on the updated Heroes Act, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services (the Committee), discussed changes in the updated bill that would support low- and moderate-income communities, small businesses and developing countries. In particular, the updated bill provides $15 billion in capital and other assistance for Community Development Financial Institutions and Minority Deposit Institutions, includes another round of stimulus payments for small businesses and provides $2 trillion through the International Monetary Fund to support developing countries.

    Federal Agencies

    Federal Reserve Board

    Federal Reserve begins 2020 Census of Finance Companies and Other Lenders

    October 6, 2020

    The Board of Governors of the Federal Reserve System (Federal Reserve) announced that it will begin the 2020 Census of Finance Companies and Other Lenders. The data collected provide a benchmark for the Federal Reserve’s monthly report on the outstanding accounts receivable of finance companies and provide a comprehensive update on these companies’ sources of funds.

    Powell Delivers Speech on Recent Economic Developments and the Challenges Ahead

    October 6, 2020

    Chair Jerome H. Powell of the Board of Governors of the Federal Reserve System delivered a speech at the National Association for Business Economics Virtual Annual Meeting.

    Federal Reserve Bank of New York

    New York Fed Announces “Culture and Communities” Event on the Creative Economy, Community Development and Impact Investing

    October 6, 2020

    The Federal Reserve Bank of New York, in conjunction with Upstart Co-Lab, will host an event highlighting New York City’s creative economy and the role cultural and financial institutions can play in New York City’s recovery from COVID-19.

    New York Fed Announces Notice of Interest Deadline for Municipal Liquidity Facility

    October 6, 2020

    The Federal Reserve Bank of New York announced a deadline for submitting a Notice of Interest (NOI) to the Municipal Liquidity Facility (MLF). Any eligible issuer that wishes to issue eligible notes to the MLF must submit an NOI no later than 30 calendar days before the MLF’s stated termination date of December 31, 2020, unless extended by the Board of Governors of the Federal Reserve System and the U.S. Department of the Treasury.

    Conference of State Bank Supervisors

    CSBS Survey Finds Community Bank Optimism on Local Economic Health Ticks Up Slightly but Concerns Remain

    October 6, 2020

    The Conference of State Bank Supervisors released the third quarter results of its Community Bank Sentiment Index. 

    International

    Bank of England

    Nick Strange of the Bank of England Delivers Speech on Resilience in a Time of Uncertainty

    October 6, 2020

    Nick Strange, Director of the Supervisory Risk Specialists of the Bank of England (Bank) delivered a speech on the policies the Bank uses to support the operational resilience of financial firms and financial market infrastructures in the UK.

    Bank of England Prudential Regulation Authority

    PRA Releases Consultation Paper on Calculation of Risks Not In Value at Risk and Stressed Value at Risk

    October 6, 2020

    The Bank of England Prudential Regulation Authority (PRA) released Consultation Paper (CP) CP15/20setting forth the PRA’s proposals to update its expectations regarding (i) the measurement of risks not in value at risk and (ii) the meaning of ‘period of significant financial stress relevant to the institution’s portfolio’ for stressed value at risk calculation.

  • This Week in Washington for October 5, 2020

    by
    Dina Ellis
    | Oct 06, 2020

    THE BIG PICTURE

    For the latest advice for businesses dealing with the coronavirus, be sure to check out Paul Hastings’ targeted alert series: https://www.paulhastings.com/coronavirus

    President Trump announced in the early hours of Friday morning that he had tested positive for COVID-19. His diagnosis is one in a cluster of cases linked to the Rose Garden ceremony held to announce Amy Coney Barrett as his nominee for the Supreme Court, with the First Lady, several top aides, his campaign manager Bill Stepien, former New Jersey Governor Chris Christie, Notre Dame President John Jenkins, and Senators Thom Tillis (R-NC) and Mike Lee (R-UT) also contracting the virus. The President, who has eschewed social distancing and the wearing of masks during several campaign events in recent weeks, was criticized for attending a fundraiser at his New Jersey golf club on Thursday after learning his aide Hope Hicks was ill. The President was transferred to Walter Reed Medical Center Friday evening for monitoring and to receive treatment, where his doctors expressed optimism about his prognosis. Senate Majority Leader Mitch McConnell announced Saturday that the Senate would remain out until October 19 in a bid to prevent further spread, but indicated hearings on Barrett’s nomination would continue on schedule.

    Earlier in the week, the President and former Vice President Joe Biden faced off in the first debate of the campaign, sparring over their records, economic plans, the integrity of the election and policies on police reform and racial equality. The evening was marked by chaotic exchanges and bickering, rife with interruptions and personal accusations. The evening became a fundraising boon for Biden, with his campaign announcing it had raised US$10M in donations in the hours immediately following the debate. Given the lack of clarity as to when the President last tested negative for the virus, some feared those in the debate hall may have been exposed on Tuesday. Biden announced on Friday that both he and his wife had tested negative and pledged to release the results of all future tests.

    Last ditch negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over a stimulus measure failed to yield any material results, making any action on additional aid unlikely prior to the election and the House’s departure for its October recess. On Monday, House Democrats unveiled their scaled back US$2.2T measure to demonstrate their priorities and values, voting to pass it on Thursday evening in an effort to pressure Republicans into making a deal. Senate Majority Leader Mitch McConnell however, criticized the package as a “far-left wish list.” Pelosi urged airlines to hold off on furloughs and layoffs, saying that payroll relief was “imminent.” The President appeared to support a larger measure via tweet over the weekend, urging the parties to get it done.

    Other highlights of last week include:

    • On Thursday, the Labor Department announced that an additional 837,000 Americans had filed for unemployment benefits last week. On Friday, the September jobs report was released, showing that while the unemployment rate fell to 7.9%, job growth had also slowed, with employers adding only 661,000 jobs.
    • Early Thursday morning, the President signed the stopgap spending measure into law, averting a government shutdown.
    • Sen. Pat Toomey (R-PA) will reportedly not seek re-election in 2022.

    LAST WEEK ON THE HILL

    House Committee Chairs Launch Investigation Into DOD’s Inappropriate Use of CARES Act Funds: On Friday, Rep. James Clyburn, Chairman of the Select Subcommittee on the Coronavirus Crisis, Rep. Maxine Waters, Chairwoman of the Committee on Financial Services, Rep. Carolyn Maloney, Chairwoman of the Committee on Oversight and Reform, and Rep. Stephen Lynch, Chairman of the Subcommittee on National Security, sent a letter to Defense Secretary Mark Esper requesting documents on the potentially inappropriate use of hundreds of millions of dollars from the CARES Act. The letter follows reporting that nearly $1 billion of Defense Production Act (DPA) funding, which Congress appropriated to DOD under the CARES Act to “prevent, prepare for, and respond to the coronavirus,” instead has been “funneled to defense contractors and used for making things such as jet engine parts, body armor, and dress uniforms.”

    HOUSE FINANCIAL SERVICES COMMITTEE

    Hearing on “License to Bank: Examining the Legal Framework Governing Who Can Lend and Process Payments in the Fintech Age”: On Tuesday, the Task Force on Financial Technology held a hearing to examine the legal framework and regulatory scope governing the oversight of traditional banks and other commercial businesses—especially technology companies—engaged in financial activity and the effect on consumer protection, financial stability, and the traditional separation of banking and commerce.

    • Raúl Carrillo, Policy Counsel, Demand Progress Education Fund; Fellow, Americans for Financial Reform Education Fund
    • Everett Sands, Chief Executive Officer, Lendistry
    • Arthur Wilmarth, Jr., Professor Emeritus of Law, George Washington University Law School
    • Brian Knight, Director, Innovation and Governance Program, Mercatus Center

    SENATE BANKING COMMITTEE

    No hearings held.

    OTHER COMMITTEES

    House Small Business Committee Hearing on “Preventing Fraud and Abuse of PPP and EIDL: An Update with the SBA Office of Inspector General and the Government Accountability Office”: On Thursday, the Subcommittee on Investigations, Oversight, and Regulations held a hearing to discuss the July 28, 2020, Management Report from the SBA Office of Inspector General (OIG) and the COVID-19 reports from the Government Accountability Office (GAO). The reports detailed a lack of internal controls and potential for fraud within SBA’s Economic Injury Disaster Loan (EIDL) program and Paycheck Protection Program (PPP). The hearing gave Members the opportunity to discuss OIG and GAO’s findings and determine if SBA’s response to these reports is consistent with their recommendations or if more work needs to be done to prevent fraud, waste, and abuse.

    • Hannibal “Mike” Ware, Inspector General, Office of the Inspector General, United States Small Business Administration
    • William Shear, Director, Financial Markets and Community Investment, United States Government Accountability Office

    Select Committee on the Coronavirus Crisis Hearing on “Health and Human Services Department’s Response to the Coronavirus Crisis”: On Friday, the Select Committee held a hybrid hearing to examine the Trump Administration’s alleged political interference in the work of scientists and public health experts at the CDC and FDA, the Administration’s refusal to provide accurate and clear public health information, and the failure of the Administration to develop and implement a comprehensive national plan to contain the coronavirus, more than eight months into this public health emergency.

    • Alex Azar, Secretary, Department of Health and Human Services

    ON THE FLOOR

    House Passes Measure on Uyghur Forced Labor: On Wednesday, the House voted 253-163 to pass H.R. 6270, the Uyghur Forced Labor Disclosure Act of 2020, sponsored by Rep. Jennifer Wexton (D-VA). The measure would require the SEC to issue rules requiring publicly traded companies to annually disclose imports of manufactured goods and materials that originate, or are sourced in, the Xinjiang Uyghur Autonomous Region. It would also require the SEC and the GAO to provide information to Congress regarding these disclosures, as well as oversight.

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 8407: Rep. Guy Reschenthaler (R-PA) introduced H.R. 8407, which would require the Securities and Exchange Commission to assess whether the disclosure of information related to investments in certain entities is necessary or appropriate for the purposes of certain reports under the securities laws, to establish the Entities of the People's Republic of China that Threaten United States National Security List.

    H.R. 8410: Rep. Andy Barr (R-KY) introduced H.R. 8410, which would require the appropriate Federal banking agencies to establish a three-year phase-in period for de novo financial institutions to comply with Federal capital standards, to provide relief for de novo rural community banks.

    H.R. 8416: Rep. Steve Cohen (D-TN) introduced H.R. 8416, which would amend the Housing and Community Development Act of 1974 to revise the formula for allocation of community development block grant funds.

    H.R. 8445: Rep. Joe Wilson (R-SC) introduced H.R. 8445, which would impose certain measures with respect to Hezbollah-dominated areas in Lebanon and Latin America, and to impose sanctions with respect to senior foreign political figures in Lebanon, Venezuela, Cuba, and Nicaragua supporting Hezbollah.

    H.R. 8451: Rep. Rosa DeLauro (D-CT) introduced H.R. 8451, which would amend the Housing and Community Development Act of 1974 to provide additional funding under the Community Development Block Grant program for units of general local government to digitize and make available online information regarding violations of housing construction, building, and safety codes.

    H.R. 8458: Rep. Ted Lieu (D-CA) introduced H.R. 8458, which would amend the Securities Exchange Act of 1934 to require public companies to provide sexual harassment claim disclosures in certain reports and to require public companies to implement mandatory sexual harassment training.

    H.R. 8462: Rep. David Price (D-NC) introduced H.R. 8462, which would safeguard taxpayer resources and strengthen the Nation's resilience against severe storms and flooding.

    H.R. 8495: Rep. Brad Sherman (D-CA) introduced H.R. 8495, which would prohibit United States persons from engaging in transactions relating to Russian sovereign debt.

    THIS WEEK ON THE HILL

    No financial services hearings scheduled.

    THE REGULATORS

    Agencies Issue Two Final Rules: On Tuesday, the Federal Reserve, FDIC, and OCC agencies finalized two rules, which are either identical or substantially similar to interim final rules currently in effect and issued earlier this year. They include: (1) A final rule that temporarily defers appraisal and evaluation requirements for up to 120 days after the closing of certain residential and commercial real estate transactions; and (2) a final rule that neutralizes—due to the lack of credit and market risk—the regulatory capital and liquidity effects for banks that participate in certain Federal Reserve liquidity facilities.

    SEC Staff to Host October 26 Roundtable on Regulation Best Interest and Form CRS: On Monday, the SEC announced October 26 as the date for its roundtable, at which Commission staff and the Financial Industry Regulatory Authority (FINRA) will discuss initial observations on Regulation Best Interest and Form CRS implementation. Regulation Best Interest and Form CRS were adopted by the Commission on June 5, 2019, as part of a package of rules and interpretations designed to address the obligations of broker-dealers and investment advisers when they provide recommendations or investment advice to retail investors. Participants will include staff from the Office of Compliance Inspections and Examinations, the Division of Trading and Markets, the Division of Investment Management, and FINRA.

    SEC Whistleblower Program Ends Record-Setting Fiscal Year with Four Additional Awards: On Wednesday, the SEC announced awards to four individuals for total payments of almost $5 million. Each of these whistleblowers provided critical information that alerted the Commission of the alleged wrongdoing and resulted in successful enforcement action. This year, the SEC has made a record 39 individual awards of approximately $175 million, more than in any prior fiscal year.

    CFTC to Hold an Open Commission Meeting on October 6: On Wednesday, CFTC Chairman Heath Tarbert announced the CFTC will hold an open meeting on Tuesday, October 6, 2020, at 10:30 a.m. The Commission will consider the following: (1) Final Rule: Amendments to Compliance Requirements for Commodity Pool Operators on Form CPO-PQR and (2) Memorandum of Understanding: MOU Between the CFTC and the Office of Financial Research Regarding the Sharing of Data and Information Collected on Form CPO-PQR.

    CFTC Charges BitMEX Owners with Illegally Operating a Cryptocurrency Derivatives Trading Platform and Anti-Money Laundering Violations: On Thursday, the CFTC announced it had filed a civil enforcement action in federal court charging five entities and three individuals that own and operate the BitMEX trading platform with operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures. “Digital assets hold great promise for our derivatives markets and for our economy,” said Chairman Heath Tarbert. “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.”

    CFTC Chairman Tarbert Announces New Agricultural Advisory Subcommittee and Seeks Nominations for Membership: On Thursday, CFTC Chairman Heath Tarbert announced that the Commission is accepting nominations for a Subcommittee to evaluate Commission policy with respect to the implementation of amendments to enumerated agricultural futures contracts with open interest (Ag-OI Subcommittee) under the CFTC’s Agricultural Advisory Committee (AAC). “I’m pleased to form this Ag-OI Subcommittee as a manifestation of the CFTC’s core value of clarity, providing transparency to market participants about our rules and processes,” said Chairman Tarbert. “I look forward to drawing upon the expertise of a broad group of market participants in the agriculture community to bolster the level of transparency in the execution of the CFTC’s statutory requirement to approve amendments to agricultural futures contracts.”

    Federal Reserve Board Invites Public Comment on Proposal that Would Update the Board's Capital Planning Requirements to Be Consistent with Other Recently Modified Board Rules: On Wednesday, the Federal Reserve Board invited public comment on a proposal that would update the Board's capital planning requirements to be consistent with other Board rules that were recently modified. Last year, the Board finalized a framework that sorts large banks into different categories based on their risks, with rules that are tailored to the risks of each category. The proposal today updates the Board's capital planning requirements—which help ensure that firms plan for and determine their capital needs under a range of different scenarios—to reflect that new framework. In particular, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements and the proposal reflects those changes. The proposal also would seek comment on the Board's existing capital planning guidance applicable to all firms.

    Federal Reserve Board Announces It Will Extend for an Additional Quarter Several Measures to Ensure that Large Banks Maintain a High Level of Capital Resilience: On Wednesday, the Federal Reserve Board announced that, due to the continued economic uncertainty from the coronavirus response, it would extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience. For the fourth quarter of this year, large banks—those with more than US$100B in total assets—will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income. The capital positions of large banks have remained strong during the third quarter while such restrictions were in place.

    Federal Reserve Board Extends Temporary Actions Aimed at Increasing the Availability of Intraday Credit Extended by Federal Reserve Banks: On Thursday, the Federal Reserve Board extended to March 31, 2021, temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. These temporary actions: (1) suspend uncollateralized intraday credit limits (net debit caps) and waive overdraft fees for institutions that are eligible for the primary credit program; (2) permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps); and (3) suspend two collections of information that are used to calculate net debit caps.

    Treasury Issues Ransomware Advisories to Increase Awareness and Thwart Attacks: On Thursday, Treasury issued a pair of advisories to assist U.S. individuals and businesses in efforts to combat ransomware scams and attacks, which continue to increase in size and scope. The Financial Crimes Enforcement Network (FinCEN) advisory, entitled Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments, provides information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags. It also provides information on effectively reporting and sharing information related to ransomware attacks. The Office of Foreign Assets Control (OFAC) advisory, entitled Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments, highlights the sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyber-enabled activities.

    CFPB, FTC, State, and Federal Law Enforcement Partners Announce Nationwide Crackdown on Phantom and Abusive Debt Collection: On Tuesday, the CFPB, along with the FTC and more than 50 federal and state law enforcement partners, announced a nationwide law enforcement and outreach initiative to protect consumers from phantom debt collection and abusive and threatening debt collection practices. The initiative, called Operation Corrupt Collector, includes enforcement actions brought by the FTC, three federal partners, and partners from 16 different states against debt collectors engaged in these illegal practices.

    CFPB Releases Assessment of TRID Mortgage Loan Disclosure Rule: On Thursday, the CFPB published an assessment of the TRID Integrated Disclosure Rule (the Truth in Lending Act and Real Estate Settlement Procedures Act). The assessment found that the TRID Rule made progress towards several of its goals. The evidence available for the assessment indicates that the TRID Rule improved consumers’ ability to locate key information, compare terms and costs between initial disclosures and final disclosures, and compare terms and costs across mortgage offers. Evidence was mixed, but leans positive, regarding whether the Rule improved consumer understanding of forms.

    HUD Secretary Launches ‘Mustard Seed Series’ Virtual Workshops for Faith Leaders and Congregations: On Wednesday, HUD Secretary Ben Carson launched a series of virtual workshops for faith congregations entitled “The Mustard Seed Series.” The virtual events will feature faith organizations that have successfully created affordable housing, reduced homelessness, or used innovative housing models to serve individuals in need. The meetings will serve as a forum for other faith organizations to learn about the experiences of these communities and to replicate the successes they have experienced.

    CDC Extends No Sail Order Through October 31: On Wednesday, the CDC announced the extension of a No Sail Order for cruise ships through October 31, 2020. This order continues to suspend passenger operations on cruise ships with the capacity to carry at least 250 passengers in waters subject to U.S. jurisdiction. Cumulative surveillance data reported to CDC from March 1 through September 29, 2020, shows at least 3,689 COVID-19 or COVID-like illness cases on cruise ships in U.S. waters, in addition to at least 41 reported deaths. The continued spread of the COVID-19 pandemic worldwide, risk of resurgence in countries that have suppressed transmission, ongoing concerns related to restarting of cruising internationally, and need for additional time to assess industry measures to control potential SARS-CoV-2 transmission on board cruise ships with passengers without burdening public health, support continuation of the No Sail Order at this time.

    OTHER NOTEWORTHY NEWS

    California Governor Signs Legislation Establishing State Consumer Financial Protection Watchdog: California Governor Gavin Newsom signed twelve bills to protect consumers from financial predators and abusive business practices. Central to the package is AB 1864, a law that significantly expands the state’s ability to protect Californians against abusive and predatory financial products and services. The bill establishes the Department of Financial Protection and Innovation (DFPI), adding 90 positions over the next three years to transform the agency into California’s version of the federal Consumer Financial Protection Bureau, the agency championed by President Obama and Senator Warren.

    ***
    Paul Hastings’ Government Relations team is monitoring these issues. We help our clients craft strategies to address federal legislative and regulatory matters. Please reach out to us if your organization needs assistance with congressional or regulatory relations.