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Advice for Businesses in Dealing with the Expanding Coronavirus Events

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  • This Week in Washington for August 3, 2020

    by
    Dina Ellis
    | Aug 03, 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

    Coronavirus cases continued to surge across the country, with 4.6 million confirmed infections and over 155,000 lives lost. Among those was former Republican presidential candidate and businessman Herman Cain, who passed away due to complications from the virus on Thursday. Representatives Louie Gohmert (R-TX) and Raul Grijalva (D-AZ) tested positive for the virus, prompting Speaker Nancy Pelosi to mandate the wearing of masks in House office buildings and on the floor. Dr. Anthony Fauci cautioned that November is likely the earliest we’ll find out if the current frontrunner vaccine candidate is effective, and advised that wearing goggles or a face shield may be beneficial as an added layer of protection in addition to masks, underscoring the ever-evolving nature of our understanding of transmission risks. Over the weekend Dr. Deborah Birx warned Americans to take precautions as we have entered a “new phase” where the virus is “extraordinarily widespread.”

    Senate Republicans unveiled their US$1T stimulus proposal, the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act, but negotiations quickly stalled as Congressional leadership struggled to find common ground. The extension of unemployment benefits continued to be a major sticking point, as both sides sought to deflect blame for their expiration. A last ditch effort to extend the UI program by one week failed, as Democrats rejected a piecemeal approach to the crisis and criticized Republicans for waiting until the eleventh hour to engage. The President signaled a willingness to accept a deal that did not include liability protections, which had been a priority of Senate Majority Leader Mitch McConnell, but considered a nonstarter by Democratic leadership.

    The first presidential debate will take place September 29th in Cleveland after Notre Dame withdrew from hosting due to coronavirus concerns. The President traveled to Texas on Wednesday for a campaign stop, as the traditionally Republican stronghold has become increasingly competitive for Democrats. The President floated via Twitter the idea of postponing the election due to uncertainty related to the pandemic, a proposal that was swiftly rejected by Congressional leaders.

    Other highlights of last week include:

    • The continuing economic damage wrought by the pandemic was brought into sharp relief on Thursday when it was announced that U.S. GDP fell at a 32.9% annual rate in the second quarter.
    • Rep. David Schweikert (R-AZ) was formally reprimanded by the House for misuse of taxpayer dollars and violating campaign finance requirements. Schweikert has accepted responsibility for his misconduct, and agreed to pay a US$50K fine to the Treasury.
    • The administration announced it would suspend new DACA applications as it explores the future of the program in the wake of the Supreme Court’s ruling.
    • During his eulogy for the late Rep. John Lewis, President Barack Obama came out in favor of eliminating the filibuster, calling it a “Jim Crow relic.”
    • Supreme Court Justice Ruth Bader Ginsburg was released from the hospital on Friday after undergoing a nonsurgical procedure.

    LAST WEEK ON THE HILL

    Brown, Warren, and Harris Call on CFPB to Protect Borrowers from Discrimination: On Friday, Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Kamala Harris (D-CA) sent a letter to Consumer Financial Protection Bureau Director Kathy Kraninger, urging the agency to take immediate actions to address potential violations of the Equal Credit Opportunity Act (ECOA) by lenders who use educational data to make credit decisions. The Senators called on Kraninger “to reverse your and Mr. Mulvaney’s decision to strip the CFPB’s Office of Fair Lending of its supervisory and enforcement duties. When Congress created the CFPB, we specifically charged the Director with creating an Office Of Fair Lending to ‘provid[e] oversight and enforcement’ of Federal fair lending laws and required this Office to submit an annual report to Congress detailing the CFPB’s efforts to ‘fulfill its fair lending mandate.’”

    Warren, Brown Criticize Fed Vice Chair Quarles' Lobbying in COVID-19 Relief Package: On Friday, Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) sent a letter to Federal Reserve's Vice Chairman for Supervision Randal Quarles questioning why he is lobbying Congress to insert regulatory favors for big banks into the upcoming COVID-19 relief package. The Senators also wrote to Chairman Powell raising concerns that Quarles is compromising Powell's claims of an independent Fed by working with Senate Republicans to craft legislation that would undermine financial protections Congress passed after the last financial crisis.

    HOUSE FINANCIAL SERVICES COMMITTEE

    Waters, Clay, and Heck Request Housing Finance Regulator Pause Rulemaking Increasing Capital for Fannie Mae and Freddie Mac: On Tuesday, Chairwoman Maxine Waters (D-CA), Rep. Wm. Lacy Clay (D-MO), and Rep. Denny Heck (D-WA) sent a letter to Mark Calabria, Director of the Federal Housing Finance Agency, urging the agency to prioritize economic recovery amid the COVID-19 pandemic crisis by pausing a rulemaking that would set new capital requirements for Fannie Mae and Freddie Mac until after the pandemic. The letter also urges FHFA to provide better analysis on how the rule would impact borrowers of color.

    Hearing on “Protecting Consumers during the Pandemic? An Examination of the Consumer Financial Protection Bureau”: On Thursday, the full Committee held a hearing to receive testimony from CFPB Director Kathy Kraninger on the CFPB’s semiannual report. Chairwoman Maxine Waters (D-CA) accused Kraninger of betraying consumers and slammed the Bureau’s move to toll back key safeguards for payday, car title, and installment loans, exposing consumers to high-cost, predatory loans.

    • Kathy Kraninger, Director, Consumer Financial Protection Bureau

    SENATE BANKING COMMITTEE

    Hearing on “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress”: On Wednesday, the full Committee held a hearing to receive testimony from CFPB Director Kathy Kraninger on the CFPB’s semiannual report. Kraninger faced tough questioning from the Democrats on the panel, who criticized the Bureau’s response to the pandemic and enforcement activity. Sen. Sherrod Brown (D-OH) claimed the rulemaking process around revisions to the payday lending rule was “clearly corrupted.” In a particularly tense exchange, Sen. Elizabeth Warren (D-MA) said that “based on your actions in this pandemic, you should resign.”

    • Kathy Kraninger, Director, Consumer Financial Protection Bureau

    OTHER COMMITTEES

    House Judiciary Committee Hearing on “Oversight of the Department of Justice”: On Monday, during an a DOJ oversight hearing, Attorney General William Barr faced tough questioning on a number of recent controversies, from police protests, the Russia investigation, and the treatment of Roger Stone and Paul Manafort.

    • William Barr, Attorney General, U.S. Department of Justice

    Joint Economic Committee Hearing on “Reducing Uncertainty and Restoring Confidence during the Coronavirus Recession”: On Thursday, the Committee held a hearing to hear from a panel of experts on various methods to address the nation’s economic crisis and reduce uncertainty.

    • Dr. Jared Bernstein, Senior Fellow, Center on Budget and Policy Priorities
    • Dr. Heather Boushey, President & CEO and Co-Founder, Washington Center for Equitable Growth
    • Dr. Douglas Holtz-Eakin, President, American Action Forum
    • Rachel Greszler, Research Fellow in Economics, Budget and Entitlements, The Heritage Foundation

    House Select Subcommittee on the Coronavirus Hearing on “The Urgent Need for a National Plan to Contain the Coronavirus”: On Friday, the Subcommittee held a hearing to examine the urgent need for a national comprehensive plan to address the coronavirus pandemic with three key officials leading the response.

    • Anthony S. Fauci, M.D., Director, National Institute of Allergy and Infectious Diseases
    • National Institutes of Health, Admiral Brett P. Giroir, M.D., Assistant Secretary for Health, Department of Health and Human Services
    • Robert R. Redfield, M.D., Director, Centers for Disease Control and Prevention

    ON THE FLOOR

    House Passes US$1.3T Spending Package: On Friday, the House voted 217-197 along largely party lines to pass a package of FY21 spending bills including funding for Labor, Health and Human Services, Education, Commerce, Justice, Energy, Financial Services and General Government, Transportation, Housing and Urban Development.

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 7793: Rep. Al Green (D-TX) introduced H.R. 7793, which would amend the Consumer Financial Protection Act of 2010 to provide for whistleblower incentives and protection.

    H.R. 7796: Rep. Joyce Beatty (D-OH) introduced H.R. 7796, which would amend the Fair Debt Collection Practices Act to restrict collections of consumer debt during a national disaster or emergency.

    H.R. 7809: Rep. Van Taylor (R-TX) introduced H.R. 7809, which would require the Secretary of the Treasury to establish a HOPE Preferred Equity Facility to guarantee certain financial investments of commercial borrowers affected by COVID-19.

    H.R. 7834: Rep. Trey Hollingsworth (R-IN) introduced H.R. 7834, which would amend the Securities Act of 1933 with respect to small company capital formation.

    H.R. 7844: Rep. Jimmy Panetta (D-CA) introduced H.R. 7844, which would authorize the Director of the Minority Business Development Agency of the Department of Commerce to provide assistance for nonprofit economic development organizations to provide services for low- and moderate-income individuals who are aspiring entrepreneurs or seeking employment, and for owners of smaller businesses.

    H.R. 7847: Rep. Ayanna Pressley (D-MA) introduced H.R. 7847, which would create a database of eviction information, establish grant programs for eviction prevention and legal aid, and limit use of housing court-related records in consumer reports.

    Small Business Lending Disclosure and Broker Regulation Act: Rep. Nydia Velazquez (D-NY) introduced the Small Business Lending Disclosure and Broker Regulation Act, which would ensure many safeguards already required in consumer lending, through the Truth in Lending Act, would also apply to small business credit markets. The bill would bolster the role of the Consumer Financial Protection Bureau in policing small business lending and bring enhanced transparency to small commercial loans.

    S. 4318: Sen. Chuck Grassley (R-IA) introduced S. 4318, the American Workers, Families, and Employers Assistance Act, which would provide assistance to American workers, families, and employers during the COVID–19 pandemic.

    S. 4321: Sen. Marco Rubio (R-FL) introduced S. 4321, the Continuing Small Business Recovery and Paycheck Protection Program Act, which would establish the Paycheck Protection Program Second Draw Loan and amend the 7(a) loan guaranty program for recovery sector business concerns.

    S. 4324: Sen. Lindsey Graham (R-SC) introduced S. 4324, the Restoring Critical Supply Chains and Intellectual Property Act, which would facilitate the availability, development, and production of domestic resources to meet national personal protective equipment and material needs, and ensure American leadership in advanced research and development and semiconductor manufacturing.

    S. 4340: Sen. Ted Cruz (R-TX) introduced S. 4340, which would ensure that a State or local jurisdiction is ineligible to receive or use funds allocated, appropriated, or authorized to address COVID-19 if that State or jurisdiction discriminates against religious individuals or religious institutions.

    S. 4344: Sen. Jon Tester (D-MT) introduced S. 4344, which would provide a tax credit to live event venues that provided refunds on tickets for events that were cancelled due to the coronavirus pandemic.

    S. 4348: Sen. Bill Cassidy (R-LA) introduced S. 4348, which would provide for the conduct of a GAO study and report on rural health access during the COVID-19 pandemic.

    S. 4361: Sen. Jack Reed (D-RI) introduced S. 4361, which would automatically extend and adjust enhanced unemployment assistance for the duration of the COVID-19 emergency and economic crisis.

    S. 4364: Sen. Martha McSally (R-AZ) introduced S. 4364, which would amend the Tariff Act of 1930 to require online retailers to disclose whether articles sold by such retailers originate in the People's Republic of China.

    S. 4367: Sen. Rand Paul (R-KY) introduced S. 4367, which would amend the Internal Revenue Code of 1986 to eliminate limitations on contributions to health savings accounts.

    S. 4378: Sen. Mitt Romney (R-UT) introduced S. 4378, which would provide for a short-term extension of the Federal Pandemic Unemployment Compensation program.

    Coronavirus Assistance for American Families Act: Senators Marco Rubio (R-FL), Bill Cassidy, M.D. (R-LA), Steve Daines (R-MT), and Mitt Romney (R-UT) introduced legislation that would provide increased Economic Impact Payments (EIP) to American families by equalizing EIPs per person, regardless of age or dependent status. The measure would provide payments of $1,000 for both adults and children with social security numbers. A family of four would receive an additional $600 more than under the CARES Act.

    THIS WEEK ON THE HILL

    No financial services hearings scheduled.

    THE REGULATORS

    Federal Reserve Board Announces an Extension of Lending Facilities: On Tuesday, the Federal Reserve Board announced an extension through December 31 of its lending facilities that were scheduled to expire on or around September 30. The three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic.

    Federal Reserve Board Announces the Extensions of its Temporary U.S. Dollar Liquidity Swap Lines and FIMA Repo Facility: On Wednesday, the Federal Reserve announced the extensions of its temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities (FIMA repo facility) through March 31, 2021. The extensions of these facilities will help sustain recent improvements in global U.S. dollar funding markets by maintaining important liquidity backstops. In addition, the FIMA repo facility will help support the smooth functioning of the U.S. Treasury market by providing an alternative temporary source of U.S. dollars other than sales of securities in the open market.

    FinCEN Issues Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the COVID-19 Pandemic: On Thursday, the Financial Crimes Enforcement Network issued an advisory to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. The advisory contains descriptions of COVID-19-related malicious cyber activity and scams, associated financial red flag indicators, and information on reporting suspicious activity.

    Treasury and United States Postal Service Reach Agreement on Terms of CARES Act Loan: On Wednesday, the U.S. Department of the Treasury announced that it had reached an agreement with the USPS on the material terms and conditions of a loan of up to $10 billion to the USPS under Section 6001 of the CARES Act. “While the USPS is able to fund its operating expenses without additional borrowing at this time, we are pleased to have reached an agreement on the material terms and conditions of a loan, should the need arise,” said Secretary Steven Mnuchin.

    Treasury Designates Key ISIS Financial Facilitators in the Middle East: On Tuesday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated two Islamic State of Iraq and Syria (ISIS) financial facilitators located respectively in Syria and Turkey for providing financial support to ISIS. This action coincides with the thirteenth meeting of the Counter ISIS Finance Group (CIFG), which includes over 60 countries and international organizations, and plays a fundamental role in coordinating efforts to deny ISIS access to the international financial system and eliminate its sources of revenue.

    CFPB Requests Information on Ways to Prevent Credit Discrimination and Build a More Inclusive Financial System: On Tuesday, the CFPB issued a request for information to seek public input on how best to create a regulatory environment that expands access to credit and ensures that all consumers and communities are protected from discrimination in all aspects of a credit transaction. The RFI is in lieu of a symposium the Bureau had planned to host on ECOA issues this Fall.

    SEC Announces Creation of the Event and Emerging Risk Examination Team in the Office of Compliance Inspections and Examinations: On Tuesday, the SEC announced the creation of the Event and Emerging Risks Examination Team (EERT) in the Office of Compliance Inspections and Examinations (OCIE). The EERT will proactively engage with financial firms about emerging threats and current market events and quickly mobilize to provide expertise and resources to the SEC's regional offices when critical matters arise.

    Small Business Capital Formation Advisory Committee Meeting to Focus on How Capital Markets Are Serving Underrepresented Founders: On Wednesday, the SEC released the agenda for the Tuesday, Aug. 4 meeting of its Small Business Capital Formation Advisory Committee, which will be hosted via video conference. In light of the challenges that minority communities face accessing capital, as well as recent events highlighting racial injustice, the Committee will focus the agenda on how capital markets are serving underrepresented founders, including minorities and women.

    COMINGS AND GOINGS AT THE AGENCIES

    SEC Names Adam Storch to Lead New Event and Emerging Risks Examination Team: The SEC announced that Adam Storch has been named Associate Director of the newly created Event and Emerging Risks Examination Team. In this role, Mr. Storch will oversee a dedicated, multidisciplinary team of specialized examiners, industry experts, accountants and quantitative analysts.

    THE COURTS

    States Sue over OCC’s Valid-When-Made Doctrine: On Wednesday, the Attorney Generals from New York, California, and Illinois filed suit against the OCC over the agency’s valid-when-made rule. In the complaint, the AGs argued the rule “would facilitate predatory lending through sham ‘rent-a-bank’ partnerships designed to evade state law” drastically altering “the statutory scheme and regulatory regime that Congress established.”

    ***
    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.


  • U.S. Department of Commerce Issues Final Rule Suspending Certain Preferential License Exceptions for Hong Kong

    by
    Tom Best, Behnam Dayanim, Shaun Wu, Quinn Dang, Talya Hutchison
    | Aug 03, 2020

    In the latest development in the continuing evolution of U.S.-China economic relations, the U.S. Department of Commerce on July 30, 2020 issued its Final Rule suspending the availability of all License Exceptions for the Hong Kong Special Administrative Region (“SAR”) that provide differential treatment as compared to those available to the People’s Republic of China (“PRC”).  The Final Rule formalizes the Department of Commerce Bureau of Industry and Security’s (“BIS”) June 30, 2020 announcement that License Exceptions are no longer available to the extent they provided the Hong Kong SAR differential treatment as compared to the PRC.

    Items controlled by the Export Administration Regulations (“EAR”) require a license for certain destinations based on specified reasons of control.  If a license for export is required, then a license application must be submitted to BIS.  However, there are a multitude of “license exceptions” that permit the export of items without a license where one would otherwise be required.  Practically, this final rule has the effect of restricting transfers of items where the transfer would have relied on a license exception to Hong Kong SAR that would not have been available for a transfer to PRC. 

    Specifically, the following License Exceptions are suspended to the extent they allowed exports or reexports to or from Hong Kong SAR, or transfers within Hong Kong SAR, when they may not be used for exports or reexports to the PRC, or transfers within the PRC:

    1. Shipments of Limited Value (LVS) (§ 740.3);
    2. Shipments to Group B Countries (GBS) (§ 740.4); 3)
    3. Technology and Software under Restriction (TSR) (§ 740.6); 4)
    4. Computers, Tier 1 only (APP) (§ 740.7(c));
    5. Temporary Imports, Exports, Reexports, and Transfers (in-country) (TMP) (§ 740.9(a)(11), (b)(2)(ii)(C, and (b)(5))
    6. Servicing and Replacement Parts and Equipment (RPL) (§ 740.10(a)(3)(viii), (a)(4), (b)(1) except as permitted to Country Group D:5, and (b)(3)(i)(F) and (ii)(C))
    7. Governments (GOV) (§ 740.11(c)(1) – Cooperating Governments only));
    8. Gift Parcels and Humanitarian Donations (GFT) (§ 740.12);
    9. Technology and Software Unrestricted (TSU) (§ 740.13); 10)
    10. Baggage (BAG) (§ 740.14) (except as permitted by § 740.14(d));
    11. Aircraft, Vessels, and Spacecraft (AVS) (§ 740.15(b)(1), (b)(2), (c)); 12)
    12. Additional Permissive Reexports (APR) (§ 740.16(a) and (j)); and
    13. Strategic Trade Authorization (STA) (§ 740.20(c)(2)).
    14. Reexports of items subject to the EAR from Hong Kong under License Exception APR § 740.16(a) are also restricted.

    While the elimination of these License Exceptions has the potential to significantly affect U.S.-China trade flows,  the Final Rule contains a savings clause for shipments that were on dock for loading, on lighter, laden aboard an exporting or transferring carrier, or en route aboard a carrier to a port of export or reexport on June 30, 2020.  Deemed export transactions that were authorized under a License Exception may continue until August 28, 2020, after which such transactions will require a license. These dates remain consistent with those contained in the June 30, 2020 announcement. 

    The Department of Commerce’s issuance of the Final Rule is consistent with the directive set forth in the Executive Order issued on July 14, 2020 by the President of the United States to revoke such license exceptions.  Hong Kong SAR has long served as a transit hub because of its open financial system and low-tax status.  The action will now pose unique challenges for companies and exporters, including not only those that export goods to Hong Kong SAR but also those that rely on Hong Kong SAR for transit. A copy of the rule can be found here: https://www.govinfo.gov/content/pkg/FR-2020-07-31/pdf/2020-16278.pdf.

  • Daily Financial Regulation Update -- Monday, August 3, 2020

    by
    FedACTion Task Force
    | Aug 03, 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 Banking, Housing, and Urban Affairs

    Crapo Recommends Extension, Expansion of COVID-19 Relief

    July 31, 2020

    U.S. Senator Mike Crapo (R-Idaho), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, sent two letters to financial agencies and regulators urging the extension and expansion of existing provisions key to providing relief and economic stability.  

    The first letter encourages the Board of Governors of the Federal Reserve System and the U.S. Department of the Treasury to quickly expand the Main Street Lending Program by setting up an asset-based lending program and commercial real estate program.  

    The second letter recommends that the federal financial regulators use their existing authority to extend relief provided under certain CARES Act provisions.  

  • Daily Financial Regulation Update -- Saturday, August 1, 2020

    by
    FedACTion Task Force
    | Aug 01, 2020

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    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Boston Fed Issues New Legal Documents for Main Street Lending Program Nonprofit Loan Facilities and Updates FAQs

    July 31, 2020

    The Federal Reserve Bank of Boston (Reserve Bank) released amended forms and agreements to include the two new nonprofit loan facilities—the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF)—recently established for eligible nonprofit organizations under the Main Street Lending Program (Program). The documents include technical changes to accommodate multi-borrower loans and simplify terms.

    In addition, the Program FAQs for eligible nonprofit organizations and the Program FAQs for eligible for-profit entities were updated.

    Changes to the FAQs for eligible nonprofit organizations include:

    • a Loan Document Checklist for NONLF and NOELF loans (FAQ Appendix A),
    • a list of required covenants to be included in NONLF and NOELF loan documents (FAQ Appendix B),
    • requirements for ongoing borrower financial reporting (FAQ Appendix C),
    • prohibitions on the use of proceeds of a Main Street loan under the NONLF and NOELF (FAQ G.21),
    • information about required certifications and covenants for the NONLF and NOELF (FAQ H.1, FAQ H.10, FAQ H.11, FAQ H.18, FAQ H.19),
    • financial and other information needed to sell participations to the Main Street SPV (FAQ L.8, FAQ L.9), and
    • other topics related to program operations (including specific guidance for borrowers and lenders, requirements for loan participations, regulatory treatment, and other operational details).

    Changes to the FAQs for eligible for-profit entities include:

    • upcoming functionality to accommodate co-borrower transactions (FAQ L.12),
    • the collateral coverage ratio requirements for the Main Street Priority Loan Facility (FAQ C.5),
    • restrictions on compensation and capital distributions for pass-through entities (FAQ H.16),
    • Employee Stock Ownership Plans and direct loan restrictions (FAQ H.17), and
    • the applicability of direct loan restrictions to a borrower’s successors (FAQ H.18).

    The Program is not yet accepting NONLF, NOELF or multi-borrower loans. The Reserve Bank will announce when NONLF, NOELF and multi-borrowers loans can be submitted and processed.

    New York Fed Issues Revised FAQs for TALF

    July 31, 2020

    The Federal Reserve Bank of New York issued revised Frequently Asked Questions for the Term Asset-Backed Securities Loan Facility.

    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

    Criticism of Purported Lobbying Effort to Reduce Bank Capital Levels

    July 31, 2020

    U.S. Senators Sherrod Brown (D-OH), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs (Committee), and Elizabeth Warren (D-MA), Ranking Member of the Committee’s Subcommittee on Consumer Protection and Financial Institutions in a series of letters asserted that Randal K. Quarles, Vice Chair for Supervision of the Federal Reserve, has engaged in a “significant lobbying effort” to urge Congress to authorize the Federal Reserve, in the COVID-19 stimulus bills, the ability to relax rules designed to constrain risk-taking by ensuring banks have sufficient capital on hand in the event of a major downturn in connection with the COVID-19 stimulus bills adopted by Congress. Senators Brown and Warren specifically cited a letter written by Quarles in April 2020, in which he urged Congress to modify Section 171 of the Dodd-Frank Act to “improve regulatory flexibility.”

    Federal Agencies

    Federal Housing Finance Agency

    FHFA Approves Extension of Temporary Policy Allowing Purchase of Qualified Loans in Forbearance

    July 31, 2020

    The Federal Housing Finance Agency approved an extension of the temporary policy, originally announced in April, 2020, that allows for the purchase of certain qualifying single-family mortgages in forbearance. The extension continues the temporary policy for loans originated through August 31, 2020.

    Freddie Mac

    Freddie Mac Multifamily Releases Midyear Outlook

    July 31, 2020

    Freddie Mac Multifamily (FMM) released its 2020 Midyear Outlook (Outlook), which projected marginal reductions in rents and increased vacancies as the multifamily market responds to the economic effects of COVID-19. According to the Outlook, although total multifamily origination volume is expected to decline in 2020 relative to 2019, FMM anticipates its own production volume will remain consistent as it works to provide liquidity to the market.

    International

    Bank of England

    Bank of England Shares Expertise with African and Asian Central Banks

    July 31, 2020

    According to a Bank of England (Bank) News Release, through a plan funded by the UK government, Bank staff are sharing their expertise on forecasting, managing and mitigating the economic and financial impacts of COVID-19 with central banks in Africa and Asia, including the South African Reserve Bank and the 15 central banks in the South African Development Community.

  • Daily Financial Regulation Update -- Friday, July 31, 2020

    by
    FedACTion Task Force
    | Jul 31, 2020

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    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Bureau of Economic Analysis Releases GDP Estimate

    July 30, 2020

    Real gross domestic product (GDP) decreased at an annual rate of 32.9% in the second quarter of 2020 according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0%. The GDP estimate is based on source data that are incomplete or subject to further revision.

    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

    Oversight Hearing on the Consumer Financial Protection Bureau’s Activities During COVID-19 Addresses Issues on the Treatment of Consumers

    July 30, 2020

    The House Committee on Financial Services held an oversight hearing addressing the Consumer Financial Protection Bureau (CFPB) and whether it was protecting consumers during the COVID-19 pandemic. Chairwoman Maxine Waters (D-CA) raised issues with the CFPB’s record of protecting consumers during the COVID-19 pandemic, including the CFPB’s weakening of reporting requirements under the Home Mortgage Disclosure Act and the rollback of rules meant to protect against predatory payday loans.

    Federal Agencies

    Financial Crimes Enforcement Network

    FinCEN Issues Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the COVID-19 Pandemic

    July 30, 2020

    The Financial Crimes Enforcement Network (FinCEN) issued an advisory to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. The advisory contains descriptions of COVID-19-related malicious cyber activity and scams, associated financial red flag indicators, and information on reporting suspicious activity. The advisory is based on FinCEN’s analysis of COVID-19-related information obtained from Bank Secrecy Act data, open source reporting, and law enforcement partners.

    Ginnie Mae

    Ginnie Mae Releases Global Market Analysis Report

    July 29, 2020

    Ginnie Mae released its monthly Global Market Analysis Report for July 2020, which covers the relative attractiveness of U.S. fixed income and Ginnie Mae mortgage-backed securities, the state of the U.S. housing market and the effects of COVID-19 forbearances on delinquencies and buyouts.

    Department of Labor

    DOL Releases Data on Unemployment Insurance Weekly Claims

    July 30, 2020

    The United States Department of Labor released a report on unemployment insurance weekly claims. In the week ending July 25, 2020, the advance figure for seasonally adjusted initial claims was 1,434,000, an increase of 12,000 from the previous week’s revised level. The previous week’s level was revised up by 6,000 from 1,416,000 to 1,422,000. The 4-week moving average was 1,368,500, an increase of 6,500 from the previous week’s revised average. The previous week's average was revised up by 1,750 from 1,360,250 to 1,362,000.

    International

    European Banking Authority

    EBA Sees First Impact of COVID-19 Materializing in EU Banks’ Q1 Data

    July 30, 2020

    The European Banking Authority published its quarterly Risk Dashboard together with the results of the Risk Assessment Questionnaire. The updated data shows that the impact of COVID-19 was mainly reflected in a contraction of banks’ capital ratios and profitability, the cost of risk increased, whereas non-performing loans ratios remained stable.

  • Daily Financial Regulation Update -- Thursday, July 30, 2020

    by
    FedACTion Task Force
    | Jul 30, 2020

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    Click here to read more from our Coronavirus series.

    Major Developments

    Federal Reserve Board Extends Temporary U.S. Dollar Liquidity Swap Lines, FIMA Repo Facility

    July 29, 2020

    The Board of Governors of the Federal Reserve System (FRB) announced the extensions, through March 31, 2021, of its temporary U.S. dollar liquidity swap lines, and the temporary repurchase agreement facility for foreign and international monetary authorities. These facilities were established in March 2020 to ease strains in global dollar funding markets resulting from COVID-19, and mitigate the effect of such strains on the supply of credit to households and businesses, both domestically and abroad. The extension is expected to help sustain recent improvements in global U.S. dollar funding markets.

    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.

    Senate Committee on Small Business and Entrepreneurship/House Committee on Small Business

    Rubio, Velázquez Release Statements on SBA Inspector General’s Warning of Suspected EIDL Fraud

    July 28, 2020

    In response to the U.S. Small Business Administration Inspector General’s issuance of a Management Advisory to the SBA and Congress, warning of suspected fraudulent activity in the COVID-19 Economic Injury Disaster Loan program, Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, and Congresswoman Nydia M. Velázquez (D-NY), Chairwoman of the House Committee on Small Business, each released statements.

    Federal Agencies

    Department of the Treasury

    Treasury, USPS Agree on CARES Act Loan Terms

    July 29, 2020

    The U.S. Department of the Treasury (Treasury) announced it had reached an agreement with the United States Postal Service (USPS) on the material terms and conditions of a loan of up to $10 billion to the USPS under Section 6001 of the CARES Act.  The loan will be documented in an agreement to be developed and executed by Treasury and USPS.

    Federal Reserve Board

    Federal Reserve Issues FOMC Statement

    July 29, 2020

    The Federal Reserve issued a statement by the Federal Open Market Committee (FOMC). In its statement, the FOMC announced it had “decided to maintain the target range for the federal funds rate at 0 to 1/4 percent”, which it expects to maintain “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The FOMC’s statement further noted that “over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions.”

    Securities and Exchange Commission

    SEC Releases Agenda for Upcoming SBCFAC Meeting

    July 29, 2020

    The U.S. Securities and Exchange Commission (SEC) released the agenda for the August 4, 2020 meeting of its Small Business Capital Formation Advisory Committee (SBCFAC), which will be hosted via video conference. The SBCFAC recently met to develop solutions that can support small businesses’ short- and long-term capital needs. The SEC responded to the SBCFAC’s feedback with temporary emergency relief to expedite the offering process for smaller, established companies during the current COVID-19 crisis.

    Investment Management’s Blass Delivers Speech to PLI Investment Management Institute

    July 29, 2020

    Dalia Blass, Director of the U.S. Securities and Exchange Commission’s (SEC) Division of Investment Management (Division), delivered a speech to the PLI Investment Management Institute. Director Blass’ speech focused on key developments in the past year including COVID-19, expectations from the Division for the remainder of the year, and how the Division is working to improve efficiencies and enhance its monitoring.

    Consumer Financial Protection Bureau

    Kraninger Testifies Before Senate Banking Committee

    July 29, 2020

    Kathleen L. Kraninger, Director of the Consumer Financial Protection Bureau (CFPB), testified before the Senate Committee on Banking, Housing, and Urban Affairs (Committee), in order to present to the Committee the CFPB’s Spring 2020 Semi-Annual Report, which covers the period October 1, 2019 through March 31, 2020.

    National Credit Union Association

    NCUA Issues Alert Regarding Treatment of COVID-19-Related Loss Mitigation Options under RESPA

    July 29, 2020

    The National Credit Union Association (NCUA) issued an alert (Alert) to notify credit unions that the Consumer Financial Protection Bureau’s (CFPB) interim final rule amending parts of Regulation X became effective on July 1, 2020. The interim final rule added a temporary exception in Subpart C to Regulation X for certain COVID-19-related loss mitigation options. The Alert outlines important changes that may impact credit unions that service mortgages regulated by Regulation X.

    State Agencies

    California Department of Business Oversight

    California DBO Observes Substantial Increase in Consumer Complaints and Inquiries during COVID-19

    July 29, 2020

    Manuel P. Alvarez, Commissioner of the California Department of Business Oversight (DBO), announced the DBO has experienced an increase of more than 40% in consumer complaints, calls and inquiries since the onset of the COVID-19 pandemic.

    International

    UK Financial Conduct Authority

    FCA Issues New Guidance to Help Firms Protect Vulnerable Consumers

    July 29, 2020

    The United Kingdom’s Financial Conduct Authority issued new best practice guidance (Guidance) designed to help financial service firms assist consumers displaying one or more characteristics of vulnerability, including physical and mental health issues, or recent life events such as bereavement. The Guidance aims to provide a framework for firms to accurately assess whether they are treating vulnerable consumers fairly, in order to ensure consistency across the financial services sector.

  • UK and EU Financial Sanctions Regimes Likely to Diverge Post-Brexit

    by
    Arun Srivastava and Nina Moffatt
    | Jul 29, 2020

    The looming end of the Brexit transition period will have practical implications for the UK’s financial sanctions regimes. This is because financial sanctions that apply in the UK today are derived from EU regulations. These will cease to apply after 31 December 2020.

    Key Takeaways

    Firms must:

    • Review replacement UK sanctions to identify any differences in sanctions targets (designated persons);
    • Similarly, firms should review the new UK provisions to identify any differences in the scope of restrictions applied;
    • Firms should consider operations in the EU which, going forward, will be subject to a different sanctions regime (i.e., the EU regime and not the UK regime); and
    • Consider the need to obtain new licences to operate without contravention of sanctions prohibitions (a licence in the UK will no longer be passportable in the EU and vice versa).

    How UK Sanctions worked pre-Brexit

    The UK has traditionally complied with UN and other multilateral sanctions regimes through EU Council Regulations and related UK Regulations made under the European Communities Act 1972. There are currently around 35 sanctions regimes that take effect in the UK under EU law and associated UK secondary legislation.

    Given the reliance on EU Regulations, the UK’s departure from the EU means that the UK has had to put in place a replacement framework through the Sanctions and Anti-Money Laundering Act 2018 (SAMLA).

    EU laws (including sanctions provisions) will continue to apply in the UK under the European Union (Withdrawal) Act 2018 until 11pm on 31 December 2020.  Following this, sanctions made under the SAMLA will replace the current EU derived sanctions regimes.

    Although the UK is unlikely to depart materially from the current EU derived sanctions regimes, there are likely to be differences in coverage, with the potential for growing divergence over time. Firms need to be live to this and ensure that they identify changes and gaps between the pre and post Brexit regimes. Clearly, firms that operate in both the UK and EU will need to be able to demonstrate compliance with both UK and EU sanctions.

    SAMLA and UK Sanctions Post-Brexit

    SAMLA enables sanctions regulations to be made by the UK for the purposes of compliance with UN and other international obligations. It also allows sanctions to be imposed for a variety of other reasons, which are (1) furthering the prevention of terrorism; (2) national security; (3) promoting international peace and security; (4) promoting compliance with international human rights law and respect for human rights; or (5) furthering foreign policy objectives.

    SAMLA is primary legislation with grants the UK Government the power to issue financial sanctions. Under the new SAMLA framework, the financial sanctions are imposed under Statutory Instruments.

    In anticipation of the end of the Brexit transition period, the Government has been issuing Statutory Instruments under SAMLA which seek to replicate the current EU sanctions regimes.  For example, the Democratic People’s Republic of Korea (Sanctions) (EU Exit) Regulations 2019 will continue existing financial sanctions regimes against North Korean designated persons.

    While the Government has been busy issuing new replacement sanctions in anticipation of the end of the transition period, the new provisions will not come into force until 31 December when the transition period ends. The Government notes that not all existing sanctions will be replaced by that time. If so, existing sanctions will continue on the basis that they are retained EU laws which have been “on-shored” and domesticated for UK law purposes.

    SAMLA and Unilateral Sanctions

    The UK Government has greater ambitions than simply carrying across existing EU provisions.

    SAMLA provides the UK with the power to impose financial sanctions for a broad range of reasons. The UK has already made use of the new powers through the Global Human Rights Sanctions Regulations 2020 (made pursuant to SAMLA) which imposed sanctions on 49 individual from Saudi Arabia, Russia, Myanmar and North Korea for involvement in human rights violations (see our July 6, 2020 blog post here).

    Gap Analysis

    Firms need to consider gaps in coverage between the existing EU sanctions and the replacement UK sanctions made under SAMLA.  Whilst the UK’s aim is to carry across the restrictions under the existing regimes there will be some differences between the EU and UK regimes. Therefore, the new replacement sanctions provisions should be compared against existing EU derived provisions and any differences identified.  Difference might exist in:

    • Persons designated as being covered by the sanctions;
    • The scope of the restrictions and prohibitions applied which might be more extensive than present measures.

    One example of this is the ability of the UK under SAMLA to designate sanctioned persons or entities by description.  Presently, they are designated by name.  This new power could bring a broader range of persons within the scope of sanctions restrictions and require firms to revisit compliance processes.

    Under SAMLA the UK can continue to grant licences or exemptions from sanctions requirements. However, these licences will not provide coverage across the EU. Firms must therefore consider EU operations separately and identify whether any new licences are required to be obtained.

    Similarly, firms that operate in the EU will need to have processes in place after 31 December 2020 to ensure that they track developments both in the UK and the EU, given the possibility of divergence.

    Please do not hesitate to contact

    Arun Srivastava (arunsrivastava@paulhastings.com; +44 (0)20.3023.5230)

    Nina Moffatt (ninamoffatt@paulhastings.com; +44 (0)20.3023.5238)

    Tom Best (tombest@paulhastings.com; +1 202 551 1821)

    or any other member of the Paul Hastings Investigations and White Collar Defense and National Security Regulation and Investigations practices if you have questions or comments.

  • Daily Financial Regulation Update -- Wednesday, July 29, 2020

    by
    FedACTion Task Force
    | Jul 29, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Federal Reserve Board Announces Extension of COVID-19 Lending Facilities

    July 28, 2020

    The Board of Governors of the Federal Reserve System (FRB) announced an extension through December 31, 2020 of the following COVID-19 facilities, all of which were scheduled to expire on or about September 30, 2020:

    • the Primary Dealer Credit Facility;
    • the Money Market Mutual Fund Liquidity Facility;
    • the Primary Market Corporate Credit Facility;
    • the Secondary Market Corporate Credit Facility;
    • the Term Asset-Backed Securities Loan Facility;
    • the Paycheck Protection Program Liquidity Facility; and
    • the Main Street Lending Program.

    News Release

    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

    Phase IV Small Business Relief Package Introduced, Including Second Round of PPP Loans

    July 27, 2020

    The Continuing Small Business Recovery and Paycheck Protection Program Act, an effort to build upon the Paycheck Protection Program (PPP) and other small business relief programs in the CARES Act, was introduced by Senators Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, and Senator Susan Collins (R-ME), a senior member of the Senate Committees on Appropriations and Health, Education, Labor, and Pensions. The bill would allow the most severely affected small businesses to receive a second PPP loan, and would create a new approximately $60 billion long-term recovery loan program that would target low-income communities and minority-owned and seasonal businesses.

    U.S. House of Representatives

    Committee on Financial Services

    Waters, Clay, and Heck Request Pause on FHFA Capital Framework Rulemaking

    July 28, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, Congressman William Lacy Clay (D-MO), Chair of the Subcommittee on Housing, Community Development and Insurance, and Congressman Denny Heck (D-WA), sent a letter to Dr. Mark Calabria, Director of the Federal Housing Finance Agency (FHFA), requesting that the agency pause until after the COVID-19 pandemic a rulemaking that would set new capital requirements for Fannie Mae and Freddie Mac (collectively, the Enterprises). In their letter, the representatives also urged FHFA to provide better analysis on how the proposed rule would impact borrowers of color. In May, 2020, FHFA announced the 424-page rule that would establish a new, complex regulatory capital framework for the Enterprises.

    Federal Agencies

    Securities and Exchange Commission

    SEC Announces Creation of Event and Emerging Risks Examination Team

    July 28, 2020

    The U.S. Securities and Exchange Commission (SEC) announced the creation of the Event and Emerging Risks Examination Team (EERT) in the Office of Compliance Inspections and Examinations. According to the SEC’s announcement, the EERT will engage with financial firms about emerging threats and current market events, and mobilize to provide expertise and resources to the SEC's regional offices when critical matters such as the COVID-19 pandemic arise.

    U.S. Small Business Administration

    SBA OIG Issues Report Outlining EIDL Fraud Concerns

    July 28, 2020

    Hannibal “Mike” Ware, Inspector General of the U.S. Small Business Administration, issued a management alert to inform the agency of strong indicators of widespread potential fraud in the Economic Injury Disaster Loan and Advance grant programs.

    Federal Reserve Bank of Boston

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

    July 28, 2020

    The Federal Reserve Bank of Boston scheduled a webinar for nonprofit organizations to learn about the new Main Street Lending Program facilities for nonprofit organizations. The session will provide an overview of the program including terms, conditions and eligibility requirements of the two new nonprofit loan options. In its statement, the Reserve Bank also provided a state-by-state list of participating lenders.

    International

    Bank of England Prudential Regulatory Authority

    PRA Issues Statements on EBA Guidelines on COVID-19 Disclosures, and Dividend Payments and Share Buybacks

    July 28, 2020

    The Bank of England’s Prudential Regulation Authority issued Statements on the European Banking Authority’s Guidelines on COVID-19 disclosures and dividend payments and share buybacks beyond the year 2020.

    UK Financial Conduct Authority

    FCA Publishes Statement on Mortgage Prisoners and COVID-19 Pandemic, as well as a Consultation Paper on Potential Assistance to Mortgage Market Consumers

    July 28, 2020

    The United Kingdom’s Financial Conduct Authority published a Statement on mortgage prisoners, and a Consultation Paper containing proposals designed to support consumers within the mortgage market.

  • Daily Financial Regulation Update -- Tuesday, July 28, 2020

    by
    FedACTion Task Force
    | Jul 28, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    NY Fed Updates Term Asset-Based Securities Loan Facility FAQs

    July 27, 2020

    The Federal Reserve Bank of New York issued revised Frequently Asked Questions (FAQs) for the Term Asset-Backed Securities Loan Facility. The previous version of the FAQs, dated July 23, 2020, had set forth requirements for investors borrowing against asset-backed securities (ABS) they already own. The revised FAQs set forth modifications to these requirements for investors borrowing against new issue eligible small business ABS.

    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.

  • This Week in Washington for July 27, 2020

    by
    Dina Ellis
    | Jul 27, 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

    Coronavirus cases continued to surge around the country as infections surpassed the 4 million mark. The President resumed his televised press briefings, which had been shelved in April, adopting a more serious tone in warning the crisis will “unfortunately, get worse before it gets better.” He urged Americans to wear masks whenever they were unable to maintain social distance, a departure from his earlier reluctance to support masking policies. He also reiterated his support for reopening schools for in-person instruction, announcing the CDC would be releasing supplemental guidance and resources on the issue.

    Negotiations over the parameters of an additional relief package remain ongoing after divisions between the administration and Republican leadership on key issues delayed the unveiling of Majority Leader Mitch McConnell’s US$1T proposal. The measure is expected to focus on “kids, jobs, and healthcare” and include US$105B in aid for schools to support reopening, US$25B for testing, a continuation of the Paycheck Protection Program, and additional direct stimulus payments to Americans. Disagreements over the extension of enhanced unemployment benefits persist and have proven a flashpoint as the July 31st expiration date looms. The President’s preferred payroll tax holiday failed to garner support and will not be included in the package. The delay has put Congress on a tight deadline, and the House is expected to delay its August recess by a week in the hope that a measure can be passed beforehand.

    Other highlights of last week include:

    • An additional 1.4 million Americans filed unemployment claims last week, a slight uptick which ended weeks of decreasing claims.
    • It was announced that the late Rep. John Lewis will lie in state at the U.S. Capitol. Lewis will be honored during a private ceremony in the Rotunda on Monday, followed by a public viewing on the Capitol steps.
    • The President announced the cancellation of the Jacksonville, Florida component of the Republican National Convention, citing coronavirus safety concerns.
    • The President’s former personal attorney Michael Cohen was released from prison on Friday after a federal judge determined his re-imprisonment earlier this month was “retaliatory” in nature.

    LAST WEEK ON THE HILL

    Brown, Cortez Masto, and Colleagues Press OCC for Information on the Agency’s Fair Lending Oversight: On Tuesday, Senators Sherrod Brown (D-OH) and Catherine Cortez Masto (D-NV) joined 16 of their Senate colleagues in sending a letter to the Office of the Comptroller of the Currency (OCC), pressing the agency for information on how it pursues violations of civil rights laws by financial institutions. The Senators cited press reports that show the OCC undermined OCC examiners’ efforts to investigate and pursue violations of fair housing and fair lending laws. The Senators called for the OCC to provide Congress with information about its enforcement activity and reaffirm the agency’s commitment to enforcing fair mortgage lending as required by law.

    HOUSE FINANCIAL SERVICES COMMITTEE

    Hearing on “The Heroes Act: Providing for a Strong Economic Recovery from COVID-19”: On Thursday, the full Committee held a hearing to discuss provisions of the HEROES Act, passed by the House in May, as well as the need for further help among families and communities hit hardest by the COVID-19 pandemic.

    • Shaun Donovan, former Secretary, U.S. Department of Housing and Urban Development, and former Director, U.S. Office of Management and Budget
    • Robert Reich, Carmel P. Friesen’s Professor of Public Policy, Goldman School of Public Policy, University of California, Berkeley, and former Secretary, U.S. Department of Labor
    • John Rogers, Jr., Chairman, Co-CEO & Chief Investment Officer, Ariel Investments
    • Steven Davis, Labor Economist, William H. Abbot Professor of International Business and Economics, The University of Chicago Booth School of Business

    SENATE BANKING COMMITTEE

    Hearing on “Nominations”: On Tuesday, the full Committee held a hearing to consider two nominees to the Securities and Exchange Commission—Commissioner Hester Peirce for a second term, and Ms. Caroline Crenshaw, and Mr. Kyle Hauptman as a nominee to be a Board Member of the National Credit Union Administration. Sen. Elizabeth Warren (D-MA) said it “would be a mistake” to give Pierce a second term as she hasn’t shown a willingness to confront “powerful interests” in the industry.

    • Hester Peirce, to be a Member of the Securities and Exchange Commission
    • Caroline Crenshaw, to be a Member of the Securities and Exchange Commission
    • Kyle Hauptman, to be a Member of the National Credit Union Administration Board

    Executive Session on “Nominations”: On Tuesday, the full Committee held a hearing to session to vote on the nominations of Judy Shelton and Christopher Waller, to serve as Members of the Board of Governors of the Federal Reserve. Shelton’s nomination has proven controversial, due to her prior advocacy for a return to the gold standard, and skepticism of the importance of an independent Fed. Despite this, the panel voted 13-12 on party lines to advance her nomination, and 18-7 to advance Waller.

    Hearing on “US-China: Winning the Economic Competition”: On Wednesday, the Subcommittee on Economic Policy held a hearing to discuss various facets of the US-China economic relationship, as well as methods to ensure the economy is strong for all Americans and for future generations.

    • Walter Russell Mead, Chace Professor of Foreign Affairs and the Humanities at Bard College, Distinguished Fellow at Hudson Institute, and The Wall Street Journal's Global View columnist
    • Chris Giancarlo, Senior Counsel, Willkie Farr & Gallagher and former Chairman, U.S. Commodity Futures Trading Commission
    • Tim Morrison, Senior Fellow, Hudson Institute; Dr. Lisa D. Cook, Professor of Economics and International Relations, Michigan State University
    • Martijn Rasser, Senior Fellow in the Technology and National Security Program at the Center for a New American Security (CNAS)

    OTHER COMMITTEES

    Senate Committee on Small Business & Entrepreneurship Hearing on “Capital Access for Minority Small Businesses: COVID-19 Resources for an Equitable and Sustainable Recovery”: On Thursday, the Committee held a hearing to focus on capital access for minority small businesses during the COVID-19 pandemic.

    • Talibah Bayles, Founder and CEO, TMB Tax and Financial Services
    • Ronald Busby Sr., President and CEO, U.S. Black Chambers, Inc.
    • Fabiana Estrada, Director of Lending Southeast, Accion
    • Marla Bilonick, Executive Director and CEO, Latino Economic Development Center

    ON THE FLOOR

    Senate Confirms Vought to Lead OMB: On Monday, the Senate voted to confirm Russ Vought to lead the Office of Management and Budget. Vought has served as interim director of the agency for over a year.

    Senate Passes Measure to Ban Garnishment of Stimulus Payments: On Thursday, the Senate passed by unanimous consent S. 3841, a bipartisan measure introduced by Senators Sherrod Brown (D-OH) and Chuck Grassley (R-IA), intended to protect CARES Act recovery payments provided from garnishment by private debt collectors.

    Senate Passes National Defense Authorization Act: On Thursday, the Senate voted 86-14 to pass the National Defense Authorization Act, which included a provision to rename military bases named after Confederate figures. The President had threatened to veto the measure, although it passed both the Chambers with veto-proof majorities.

    House Approves Spending Package: On Friday, the House voted 224-189 to pass a four-bill US$259.5B spending package in a bid to prevent a government shutdown. Despite passing the appropriation bills, the likeliest scenario remains a stopgap measure. The House has teed up an additional seven-bill US$1.4T minibus that will be voted on this week.

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 7671: Rep. Filemon Vela (D-TX) introduced H.R. 7671, which would provide for the establishment of a COVID-19 Small Business Recovery Fund.

    H.R. 7688: Rep. David Kustoff (R-TN) introduced H.R. 7688, which would amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to establish a Portal for Appraiser Credentialing and AMC Registration Information.

    H.R. 7709: Rep. Gregory Meeks (D-NY) introduced H.R. 7709, which would amend the CARES Act to establish community investment programs.

    H.R. 7717: Rep. Rashida Tlaib (D-MI) introduced H.R. 7717, which would authorize Federal reserve banks to purchase COVID-19 related municipal issuances.

    H.R. 7738: Rep. Matt Cartwright (D-PA) introduced H.R. 7738, which would require the integration of climate-resilience considerations into all development work of the United States.

    H.R. 7743: Rep. Rosa DeLauro (D-CT) introduced H.R. 7743, which would require the Secretary of Housing and Urban Development to establish a national evictions database.

    S. 4213: Sen. Joni Ernst (R-IA) introduced S. 4213, which would exclude from income and payroll taxes compensation received by front-line employees during the COVID-19 emergency.

    S. 4214: Sen. Rob Portman (R-OH) introduced S. 4214, which would provide a payroll tax credit for certain expenses associated with protecting employees from COVID-19.

    S. 4268: Sen. Maggie Hassan (D-NH) introduced S. 4268, which would improve coordination between the paycheck protection program and employee retention tax credit.

    S. 4275: Sen. John Thune (R-TX) introduced S. 4275, which would require recipients of Pandemic Unemployment Assistance to provide employment documentation.

    S. 4283: Sen. Ron Wyden (D-OR) introduced S. 4283, which would provide funding for States to improve their unemployment insurance technology systems.

    S. 4297: Senators Ted Cruz (R-TX), Thom Tillis (R-NC), David Perdue (R-GA), and Kelly Loeffler (R-GA) introduced S. 4297, the Addressing Missed-savings Opportunities for Retirement due to an Epidemic Act (AMORE Act), legislation that would allow individuals facing financial challenges and who are unable to make contributions to their tax-advantaged retirement accounts in 2020 to make "catch-up" contributions to these accounts in the coming years.

    THIS WEEK ON THE HILL

    Wednesday, July 29

    Senate Banking Committee Hearing on “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress”: 10:00 AM via WebEx.

    Thursday, July 30

    House Financial Services Committee Hearing on “Protecting Consumers During the Pandemic? An Examination of the Consumer Financial Protection Bureau”: 12:30 PM.

    THE REGULATORS

    Federal Reserve Board Announces Expansion of Counterparties in the TALF, SMCCF, and CPFF: On Thursday, the Federal Reserve Board broadened the set of firms eligible to transact with and provide services in three emergency lending facilities. Encouraging a broader range of agents for the Term Asset-Backed Securities Loan Facility (TALF) and counterparties for the Commercial Paper Funding Facility (CPFF) and Secondary Market Corporate Credit Facility (SMCCF) will increase the Federal Reserve's operational capacity and insight into the respective markets.

    Agencies Adopt Final Rule on the Orderly Liquidation of Covered Broker-Dealers under Title II of the Dodd-Frank Act: On Friday, the SEC and FDIC adopted a final rule required by the Dodd-Frank Act clarifying and implementing provisions relating to the orderly liquidation of certain brokers or dealers (covered broker-dealers) in the event the FDIC is appointed receiver under Title II of the Dodd-Frank Act. The FDIC and SEC developed the final rule in consultation with the Securities Investor Protection Corporation (SIPC).

    SEC Adopts Rule Amendments to Provide Investors Using Proxy Voting Advice More Transparent, Accurate, and Complete Information: On Wednesday, the SEC voted 3-1 to adopt amendments to its rules governing proxy solicitations designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate, and complete information on which to make voting decisions. The amendments condition the availability of two exemptions from certain of the federal proxy rules often used by proxy voting advice businesses on compliance with tailored and comprehensive conflicts of interest disclosure requirements.

    Federal Reserve Board Finalizes Rule Implementing Technical, Clarifying Updates to FOIA Procedures, and Changes to Rules for the Disclosure CSI: On Friday, the Federal Reserve Board finalized a rule that implements technical, clarifying updates to its Freedom of Information Act (FOIA) procedures, and changes to its rules for the disclosure of confidential supervisory information (CSI), which is supervisory information belonging to the Board that may include proprietary financial institution-specific information. Some of these changes include updating definitions for expedited processing and the different categories of requesters. The final rule updates the Board's FOIA regulation to be consistent with the Board's current practices and to incorporate recent changes in law and guidance.

    Office of the Comptroller of the Currency Issues Proposed True Lender Rule: On Monday, the OCC proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party. The proposed rule would resolve uncertainty by specifying that a bank makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.

    OCC Clarifies Federally Chartered Banks and Thrifts May Provide Custody Services for Crypto Assets: On Wednesday, the OCC published a letter clarifying national banks' and federal savings associations' authority to provide cryptocurrency custody services for customers. The OCC concluded that providing cryptocurrency custody services, including holding unique cryptographic keys associated with cryptocurrency, is a modern form of traditional bank activities related to custody services. Crypto custody services may extend beyond passively holding "keys." "From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers," said Acting Comptroller of the Currency Brian Brooks. "This opinion clarifies that banks can continue satisfying their customers' needs for safeguarding their most valuable assets, which today, for tens of millions of Americans includes cryptocurrency."

    HUD Terminates 2015 AFFH Rule: On Thursday, HUD Secretary Ben Carson announced the Department will ultimately terminate the Obama Administration’s Affirmatively Furthering Fair Housing (AFFH) regulation issued in 2015. Carson described the rule as “unworkable and ultimately a waste of time for localities to comply with.” Sen. Sherrod Brown (D-OH) slammed the move, saying it was “a dark day for the country” and urging Secretary Caron to reinstate the AFFH.

    CFTC Approves Final Cross-Border Swaps Rule and an Exempt SEF Amendment Order at July 23 Open Meeting: On Thursday, the CFTC approved a final rule on the cross-border application of certain swap provisions under the Commodity Exchange Act (CEA). On a 3-2 vote, the Commission adopted a final rule that addresses the cross-border application of the swap dealer (SD) and major swap participant (MSP) registration thresholds and certain requirements applicable to SDs and MSPs; establishes a formal process for requesting comparability determinations for the requirements from the CFTC; and defines key terms for the purpose of applying the CEA’s swaps provisions to cross-border transactions. Additionally, the Commission unanimously approved an amended order that: (i) exempted sixteen additional multilateral trading facilities (MTFs) and organized trading facilities (OTFs) authorized within the European Union from the requirement to register as swap execution facilities; and (ii) clarified the application of the existing order to United Kingdom (UK) based MTFs and OTFs during the UK’s Brexit transition period. In conjunction with the Commission’s approval of the final cross-border rule, the Divisions of Swap Dealer and Intermediary Oversight (DSIO), Clearing and Risk (DCR), and Market Oversight (DMO) withdrew a staff advisory and no-action relief regarding certain cross-border situations and issued new no-action relief.

    FDIC Seeks Input on Voluntary Certification Program to Promote New Technologies: On Monday, the FDIC announced that it is seeking the public's input on the potential for a public/private standard-setting partnership and voluntary certification program to promote the efficient and effective adoption of innovative technologies at FDIC-supervised financial institutions. “Fostering innovation in the financial sector is a top priority for the FDIC,” said Chairman Jelena McWilliams. “We have to remove unnecessary regulatory impediments that banks must overcome when developing or deploying new technologies.”

    FDIC Minority Depository Institutions Subcommittee to Meet: On Friday, the FDIC announced the agency’s Minority Depository Institutions (MDIs) Subcommittee to the Advisory Committee on Community Banking will meet virtually on Monday, July 27. During the public portion of the meeting, the Subcommittee members will share insights into key challenges and opportunities facing their communities and financial institutions. Following the public meeting, Subcommittee members will provide feedback on the FDIC’s strategies to preserve and promote MDIs, and on recent private sector commitments and engagement to leverage the work of MDIs in their communities, in preparation for presenting its findings to the Advisory Committee on Community Banking.

    FDIC Issues Final Rule Revising and Codifying Section 19 to Allow Greater Employment Opportunities for Individuals with Certain Minor Criminal Offenses on Their Records: On Friday, the FDIC approved a final rule to revise and incorporate into the FDIC’s regulations a longstanding Statement of Policy (SOP) related to individuals with certain criminal offenses on their records who seek employment in the banking industry. Based on filings over the past several years, the FDIC expects that the revisions in the final rule will reduce applications required under Section 19 by 30 percent.

    CFPB to Host Symposium July 29: On Wednesday, the CFPB announced that it will hold a symposium on the use of cost-benefit analysis in consumer financial protection regulation on July 29 at 9:30 a.m. The first panel will consider questions related to how the Bureau should use cost-benefit analysis in developing consumer financial regulations and whether the Bureau’s practices provide the proper incentives for the best use and reporting of cost-benefit analysis. The second panel will focus on how the Bureau may help advance the methodology of cost-benefit analysis for consumer financial regulation.

    CFPB Announces Plan to Issue ANPR on Consumer-Authorized Access to Financial Data: On Friday, the CFPB announced that it plans to issue an advance notice of proposed rulemaking (ANPR) later this year on consumer-authorized access to financial records. The announcement follows a symposium the Bureau held earlier this year on the topic, which included experts from consumer groups, fintechs, trade associations, financial institutions, and data aggregators.

    COMINGS AND GOINGS AT THE AGENCIES

    Freddie Mac Multifamily Names Ling Xu Vice President of Multifamily Investments and Portfolio Management: On Monday, Freddie Mac announced that Ling Xu has been named vice president of Multifamily Investments & Portfolio Management. Xu first joined Freddie Mac in 2002 and served most recently as senior director of Multifamily Portfolio Strategy & Execution.

    FDIC Names Five New Members to Its Systemic Resolution Advisory Committee: On Thursday, the FDIC named five new members to its Systemic Resolution Advisory Committee (SRAC), which was created by the Board of Directors in 2011 to provide the agency with advice and recommendations on a broad range of issues regarding the resolution of systemically important financial companies. The five new members of the SRAC are: Ben Bernanke, Gary Cohn, Robert Drain, Timothy Mayopoulos, and Sandie O’Connor.


  • Daily Financial Regulation Update -- Saturday, July 25, 2020

    by
    FedACTion Task Force
    | Jul 25, 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

    New York Fed Releases Updated Form Documents and Certifications for the Municipal Liquidity Facility

    July 23, 2020

    The Federal Reserve Bank of New York has updated the Form Documents and Certifications for the Municipal Liquidity Facility to include revised certification forms.

    International

    European Commission

    Coronavirus Response: Making Capital Markets Work for Europe's Recovery

    July 24, 2020

    The European Commission (Commission) adopted a Capital Markets Recovery Package, as part of the Commission’s overall Coronavirus recovery strategy. On April 28, 2020, the Commission proposed a banking package to facilitate bank lending to households and businesses throughout the European Union. The current measures aim to make it easier for capital markets to support European businesses’ recovery from the crisis. The package proposes targeted changes to capital market rules to encourage greater investments in the economy, allow for the rapid re-capitalization of companies and increase banks’ capacity to finance the recovery.

    UK Financial Conduct Authority

    Statement on Updated Guidance for Insurance and Premium Finance Firms

    July 24, 2020

    The Financial Conduct Authority (FCA) announced proposals to extend a series of temporary measures to help customers who hold insurance and premium finance products and who may be in temporary financial difficulties because of COVID-19. The FCA proposes to extend such measures until October 31, 2020.

  • U.S. Corporate Regulation Increases Amidst U.S.-China Tensions

    by
    Shaun Wu, Jia Yan and Jian Wu
    | Jul 24, 2020

    As diplomatic tensions between Washington and Beijing rise, there is a corresponding increase in U.S. and Chinese regulation of corporate economic activity between the two nations.

    This post addresses some important recent U.S. legal and regulatory developments; subsequent PHIRE posts will address the emerging Chinese response, and the seemingly inevitable increase in restrictive measures to be adopted by both sides in the future.           

    On February 13, 2020, wholesale changes took effect to the regulations implementing the U.S. Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).  These rules cover a large number of provisions of FIRRMA that expanded the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), but which lay dormant awaiting regulations to implement them.  Chaired by the Secretary of the Treasury, CFIUS is an interagency body with power to review foreign investments that could pose a threat to U.S. national security.  The key change implemented by the new regulations was to empower CFIUS to review even non-controlling foreign investments – at any level – in a U.S. business that manufactures, develops, designs or tests critical technology, operates or supports critical infrastructure or collects or stores large amounts of sensitive personal data (A “TID” U.S. business). [1]  Other regulations issued by Treasury the same day implement FIRRMA’s coverage of certain covered real estate transactions. 

    These long-awaited changes to the CFIUS regulations greatly expand the number and types of foreign investment transactions that are subject to national security scrutiny.  When coupled with CFIUS’s demonstrated increased focus on so-called “nonfiled transactions” (deals that closed without voluntarily seeking CFIUS clearance), there is little question but that foreign investors must evaluate the impact of a CFIUS review for any investment in a U.S. business engaged in sensitive or critical activities.  

    On May 20, 2020 the U.S. Senate passed the Holding Foreign Companies Accountable Act (HFCAA) which aims to amend the Sarbanes-Oxley Act of 2002.  The legislation is currently being considered by the U.S. House of Representatives.  Per the Senate bill’s terms, a non-U.S. issuer that retained a public accounting firm in a foreign jurisdiction that is not inspected by or registered with the Public Company Accounting Oversight Board (PCAOB) would be required to establish that it is not owned or controlled by a government or governmental entity in that jurisdiction, and the U.S. Securities and Exchange Commission (SEC) would be required to publicly identify all  U.S.-listed companies that use public accounting firms in foreign jurisdictions which deny the access to audit information due to prohibitions imposed by a governmental authority in that foreign jurisdiction.  Entities that fail to comply or have their financials audited by PCAOB-registered auditor for three consecutive years would risk being barred from listing on national and over-the-counter exchanges in the U.S.  

    There have been a number of high-profile accounting scandals of the past decade relating to Chinese so-called reverse-mergers, and the recent accounting scandals, has raised the temperature even higher.  The potential implications of the HFCAA are enormous.   There are currently over 200 Chinese-based U.S.-listed companies with a combined value north of $1.8 trillion USD, many of which could be faced with pressure to de-list.  If the HFCAA became law, we would also expect the number of China-based companies listing on U.S. exchanges to be dramatically reduced.

    In yet another development affecting operations of Chinese companies in the United States, on July 1, 2020 the U.S. Departments of State, Commerce, Homeland Security, and Treasury issued the Xinjiang Supply Chain Business Advisory (the “Advisory”). The Advisory cautions businesses that have connections to supply chains within Xinjiang of potential reputational, economic, and legal risks and recommends conducting due diligence in line with international best practices. Since the release of the Advisory, the United States has sanctioned Chinese governmental entities and government officials involved in alleged human rights abuses in Xinjiang.

    Given the accelerating pace of U.S. policy developments involving foreign businesses, companies in China and abroad are well-advised to stay abreast of changes and ensure that their operations are fully compliant with relevant regulations, including measures that could expose them to risks of sanctions and penalties.  Paul Hastings’ robust international regulatory enforcement practice remains highly focused on providing our clients with up-to-date information and guidance on best practices, to ensure successful navigation of the ever-more complex cross-border business landscape.

  • Foreign Investment Control in France: New Derogatory Regime Applicable to Foreign Investment in French Public Companies

    by
    Sébastien Crepy & Nicolas Lovas
    | Jul 24, 2020
    Recent reforms on foreign investments control in France have contributed to a substantial evolution of its regime and, in particular, to strengthening its implementation. While Decree No. 2018-1057 of November 29, 2018 initially eased the prior authorization procedure for investment by introducing a preliminary written request to the French Ministry of Economy and Finance (the “Ministry”) for both the French target company and the foreign investor, strengthening of the foreign investments control in France has been intensified.

    Click here to read the alert.
  • Daily Financial Regulation Update -- Friday, July 24, 2020

    by
    FedACTion Task Force
    | Jul 24, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Federal Reserve Board

    Federal Reserve Board Expands Counterparties, Agents for Emergency Lending Facilities; Issues Revised FAQs

    July 23, 2020

    The Board of Governors of the Federal Reserve System (FRB) broadened the set of firms eligible to transact with the FRB and provide services in the Term Asset-Backed Securities Loan Facility (TALF), Commercial Paper Funding Facility (CPFF), and Secondary Market Corporate Credit Facility (SMCCF). By encouraging a broader range of agents for the TALF, and counterparties for the CPFF and SMCCF, the FRB is seeking to increase participation in the programs.

    Federal Reserve Board Publishes Main Street Lending Program’s FAQs for Nonprofit Lending

    July 23, 2020

    The Board of Governors of the Federal Reserve System released new Frequently Asked Questions (FAQs) specifically addressing the Main Street Lending Program facilities for nonprofit organizations, including the Nonprofit Organization New Loan Facility and the Nonprofit Organization Expanded Loan Facility.

    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

    Hearing on Capital Access for Minority Small Businesses

    July 23, 2020

    The Senate Committee on Small Business and Entrepreneurship (Committee), held a hearing titled, “Capital Access for Minority Small Businesses: COVID-19 Resources for an Equitable and Sustainable Recovery.”
     
    A live-stream of the hearing can be found on the Committee’s website. 

    U.S. House of Representatives

    Committee on Financial Services

    Financial Services Committee Holds Hearing on Economic Recovery

    July 23, 2020

    The House Committee on Financial Services (Committee) held a full Committee hearing entitled, “The Heroes Act: Providing for a Strong Economic Recovery from COVID-19.” Congresswoman Maxine Waters (D-CA), Chairwoman of the Committee, delivered an opening statement at the hearing.

    A webcast of the hearing can be found on the Committee’s website.

    Federal Agencies

    Department of Labor

    Labor Department Issues News Release on Unemployment Insurance Weekly Claims

    July 23, 2020

    The U.S. Department of Labor issued a News Release regarding weekly unemployment insurance claims. The News Release states that, for the week ending July 18, the advance figure for seasonally adjusted initial claims was 1,416,000, an increase of 109,000 from the previous week’s revised level; the previous week's level was revised up by 7,000 from 1,300,000 to 1,307,000; the four-week moving average was 1,360,250, a decrease of 16,500 from the previous week's revised average; and, the previous week’s average was revised up by 1,750, from 1,375,000 to 1,376,750.

    International

    European Banking Authority

    EBA Publishes Guidelines on 2020 Supervisory Review and Evaluation

    July 23, 2020

    Following the publication of its statement on additional supervisory measures in relation to the COVID-19 pandemic, the European Banking Authority (EBA) published Guidelines setting forth a special procedure for the supervisory review and evaluation process (SREP) for the year 2020. The new Guidelines identify how flexibility and pragmatism can be exercised in relation to the SREP framework, in the context of the COVID-19 pandemic. The SREP is the process by which supervisors regularly assess and measure risks for individual banks, and provide the banks with key objectives to address the identified risks.

    Bank of England

    Brazier Delivers Speech on Corporate Sector’s Financing Needs

    July 23, 2020

    Alex Brazier, the Bank of England’s Executive Director for Financial Stability Strategy and Risk, delivered a speech entitled, “Protecting Economic Muscle: Finance and the Covid Crisis”. In his speech, Mr. Brazier discussed the United Kingdom’s corporate sector’s financing needs, analyzed how cash flows could evolve in the coming months, and examined how companies could finance their cash-flow deficit.

    Haskel Delivers Speech on Economic Effects of COVID-19

    July 23, 2020

    Jonathan Haskel, External Member of the Bank of England’s Monetary Policy Committee, delivered a speech entitled, “From Lockdown to Recovery - the Economic Effects of COVID-19”. In his speech, Mr. Haskel discussed some of the initial modelling of the economic impact of COVID-19, and how recent developments in economic modelling can shed light on how the dual fears of infection and unemployment might shape the recovery.

  • Practical Next Steps Following Invalidation of Privacy Shield

    by
    Sarah Pearce, Behnam Dayanim, Jacqueline Cooney, Ashley Webber, and Daniel Julian
    | Jul 23, 2020

    Following the decision last week by the Court of Justice of the European Union (CJEU) to invalidate the EU-U.S. Privacy Shield (further details on the decision can be read here), the question asked by many businesses has been: we transfer personal data to the U.S., what should we do now?  The answers to that question are not straightforward and likely will evolve as regulatory and political reactions to the decision unfold.  However, we do recommend that companies that transfer data from the EEA (European Economic Area) to the United States take several steps now.

    Next Steps

    1. Map Data Flows: Conduct a review of all international data transfer activities involving EEA personal data and develop a map of all affected transfers, including details of the relevant parties (be they group companies or other third parties such as vendors, stakeholders, customers or the like).
    2. Develop Action Plan: Document an actionable plan for operationalizing next steps within the business, including prioritizing data flows based on, for example, the volume or sensitivity of the data involved or the importance of the transfer for the business.For those data flows involving third parties such as vendors, the plan should consider whether the business itself will select and implement an alternative mechanism (if needed) or whether the third party is best positioned to lead the change.
    3. Continued Compliance: Whilst mapping data flows and developing the action plan, businesses that rely on Privacy Shield to transfer personal data should continue to do so, and those certified with Privacy Shield should continue to comply with their Privacy Shield obligations.
    4. Select and Implement Suitable Alternative Mechanism: For impacted data flows, the business should consider which alternative transfer mechanism is most suitable for each and seek to implement accordingly.Possible alternative mechanisms include:
      1. Standard Contractual Clauses (SCCs): the implementation of the SCCs is the most efficient of the options, but businesses intending to take this approach will need to consider the decision of the CJEU on their use – namely, that businesses using the SCCs should, where required, provide additional safeguards in order to ensure adequate protection of the personal data and data subject rights in the third country.We also see potential danger in the CJEU ruling for the continued viability of the SCCs for U.S. businesses.The extent of that risk may become apparent as the court proceedings in that matter continue in the Irish courts, but, for the moment, for many businesses, the SCCs may be the most attractive option.
      2. Binding Corporate Rules (BCRs):the BCRs require approval from certain data protection regulators, and this can take time, in some instances, up to a year. The BCRs are therefore not a “quick fix,” but, given the specific protections included within BCRs, they will likely emerge as a most solid and more readily used mechanism to legitimize data transfers within multinational corporations with European operations.
      3. Approved "Ad Hoc Clauses": Similar to the BCRs, as an alternative long-term measure, businesses may consider applying for approval of their own standard data protection clauses, but again, this can take time.
    5. Monitor Guidance and Legal Developments: Over the coming weeks, regulators across the EEA and the UK will release guidance on applying the CJEU’s decision, and businesses should be alert to any such guidance.We will continue to monitor and report on any of the guidance as it emerges.In addition, as noted, the CJEU decision now returns the matter to the Irish courts.It will be important to watch as that proceeding unfolds to see how those courts apply the CJEU’s guidance to the SCCs.
    6. Privacy Notices: Privacy notices should be reviewed and updated to the extent affected by the decision and to reflect the alternative means of transferring personal data implemented by the business.

    For more information or guidance on how to react to the CJEU decision, please contact any of the following:

    London

    Sarah Pearce

    sarahpearce@paulhastings.com

    +44 (0)20.3023.5168

    Ashley Webber

    ashleywebber@paulhastings.com

    +44 (0)20.3023.5197

    Washington D.C.

    Jacqueline Cooney

    jacquelinecooney@paulhastings.com

    +1.202.551.1965

    Behnam Dayanim

    bdayanim@paulhastings.com

    +1.202.551.1737

    Robert Silvers

    rsilvers@paulhastings.com

    +1.202.551.1216

    Sherrese Smith

    sherresesmith@paulhastings.com

    +1.202.551.1965

    Chicago

    Aaron Charfoos

    aaroncharfoos@paulhastings.com

    +1.312.499.6016

  • Daily Financial Regulation Update -- Thursday, July 23, 2020

    by
    FedACTion Task Force
    | Jul 22, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    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

    Review of SBA Technology Systems and Modernization Efforts

    July 22, 2020

    The House Small Business Subcommittee on Investigations, Oversight, and Regulations held a hybrid hearing focused on long-standing technological issues at the Small Business Administration (SBA). Although the SBA has made strides in improving its IT over the past decade, the influx of activity from small business owners attempting to access relief during the COVID-19 crisis (e.g., PPP, EIDL) has further exposed flaws in SBA technology that have been present for years. Lenders, borrowers, applicants, and third-party vendors have reported technological shortcomings that have raised concerns about data privacy, capacity and access issues within the E-Tran loan processing system, and the potential for fraud in relief programs. During the hearing, members discussed the technological issues SBA is facing and its plan to improve its IT systems with SBA Deputy Chief Information Officer, Guy Cavallo. 

    International

    Bank of England Prudential Regulation Authority

    Climbing Mountains Safely - Speech by Sarah Breeden

    July 22, 2020

    Sarah Breeden, Executive Director, UK Deposit Takers Supervision at the Prudential Regulation Authority (PRA), discussed a new guide for banks that is designed to help new and growing banks move from initial authorization to becoming an established player in the banking market. The guide builds on the steps the PRA has already taken to lower barriers to entry for new firms, which over the past few years have helped support change in the UK banking system.

  • How Are Governments Reacting to the Invalidation of Privacy Shield?

    by
    Sarah Pearce & Ashley Webber
    | Jul 22, 2020
    Following the decision by the Court of Justice of the European Union (the "CJEU") on 16 July 2020 invalidating Privacy Shield and imposing potential constraints on the use of Standard Contractual Clauses ("SCCs") (more information on the decision itself can be read here), we are starting to see data protection authorities and other bodies across the EU, and globally, publicly discussing and commenting on the decision.

    Click here to read the alert.
  • Daily Financial Regulation Update -- Wednesday, July 22, 2020

    by
    FedACTion Task Force
    | Jul 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

    Rubio to Chair Hearing on Capital Access for Minority Small Businesses

    July 21, 2020

    On Thursday, July 23, 2020, at 10:00 A.M. Eastern, U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship (Committee), will convene a hearing titled, “Capital Access for Minority Small Businesses: COVID-19 Resources for an Equitable and Sustainable Recovery.”

    The hearing will be live-streamed on the Committee’s website.

    Federal Agencies

    Federal Reserve Bank of New York

    New York Fed to Hold Technical Briefing on Primary Market Corporate Credit Facility

    July 21, 2020

    The Federal Reserve Bank of New York announced it will hold a technical briefing on the Primary Market Corporate Credit Facility on Friday, July 31, 2020, from 10:00 to 11:00 A.M. Eastern.

    International

    European Banking Authority

    EBA Publishes Overview of Public Guarantee Schemes Issued in Response to COVID-19

    July 21, 2020

    The European Banking Authority (EBA) published a list of the public guarantee schemes issued in response to the COVID-19 pandemic. The publication, which complements the information included in the EBA Report on the implementation of selected COVID-19 policies, aims to provide the public with transparency regarding the existence of public guarantees, and to respond to the European Commission’s request for a stock-take of such guarantees.

  • Daily Financial Regulation Update -- Tuesday, July 21, 2020

    by
    FedACTion Task Force
    | Jul 21, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Department of the Treasury

    SBA and Treasury Update Lender Applications for the Paycheck Protection Program

    July 20, 2020

    The U.S. Small Business Administration (SBA) and U.S. Department of the Treasury updated the following application forms for lenders seeking to make financing available as part of the SBA’s Paycheck Protection Program:

    (i) for federally insured deposit or institutions, federally insured credit unions and farm credit system intuitions; and

    (ii) for non-bank and non-insured federally insured depository institution lenders.

    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 Issues Statement on Oversight of the Small Business Administration and Department of the Treasury Pandemic Programs

    July 17, 2020

    Representative Nydia M. Velázquez (D-NY), Chairwoman of the Committee on Small Business, stated she hoped that Secretary of the Treasury Steven Mnuchin and SBA Administrator Jovita Carranza would commit to do more for minority- and women-owned businesses and establish a more efficient process for forgiving loans under the SBA’s Paycheck Protection Program, in remarks during a hearing on oversight of the Small Business Administration and Department of the Treasury pandemic programs.

  • Anti-Money Laundering Lessons to be Learnt from the Commerzbank Fine

    by
    Arun Srivastava & Gesa Bukowski
    | Jul 20, 2020
    With the hefty £37.8 million fine imposed on Commerzbank AG’s London branch last month (and an accompanying strong deterrent message for the market more generally), the UK Financial Conduct Authority (FCA) have signalled their intention to continue to come down hard on firms’ breaches of anti-money laundering obligations.

    Click here to read the alert.