Menu

Advice for Businesses in Dealing with the Expanding Coronavirus Events

< Back to the Summary Page

  • Daily Financial Regulation Update - Thursday, June 4, 2020

    by
    FedACTion Task Force
    | Jun 04, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Senate Passes Paycheck Protection Program Flexibility Act of 2020

    June 3, 2020

    The U.S. Senate, by unanimous consent, passed the Paycheck Protection Program Flexibility Act of 2020, which was previously approved by the U.S. House of Representatives as H.R. 7010. The bill now heads to the President for his signature. The bill modifies certain provisions related to the forgiveness of loans under the Paycheck Protection Program (PPP) and provides borrowers greater flexibility in how they spend PPP loan proceeds. Principally, the bill:

    • Reduces the portion of PPP loan proceeds that must be spent on payroll costs from 75% to 60%;
    • Extends the time period for borrowers to spend the loan proceeds from the current eight-week period to the earlier of 24 weeks or December 31, 2020;
    • Extends the deadline to apply for a PPP loan to December 31, 2020;
    • Increases the minimum loan maturity from two years to five years;
    • Extend December 31, 2020 from June 30, 2020 the time small businesses have to rehire employees or restore payroll levels without incurring any reduction in the PPP loan forgiveness amount;
    • Provides exemptions in eligibility for loan forgiveness for employee unavailability when an employer is unable to rehire an employee or hire a replacement or for the inability to return to the same level of business due to compliance with certain COVID-19-related orders; and
    • Allows PPP loan borrowers to be eligible to defer payroll tax payments.
    • Paycheck Protection Program Flexibility Act of 2020

    Federal Reserve Board Announces an Expansion in the Number and Type of Entities Eligible to Directly Use its Municipal Liquidity Facility and Issues Revised FAQs

    June 3, 2020

    The Federal Reserve Board announced an expansion in the number and type of entities eligible to directly use its Municipal Liquidity Facility (MLF). Under the new terms, all U.S. states will be able to have at least two cities or counties eligible to directly issue notes to the MLF regardless of population. Governors of each state will also be able to designate two issuers in their jurisdictions whose revenues are generally derived from operating government activities (such as public transit, airports, toll facilities, and utilities) to be eligible to directly use the MLF.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Small Business and Entrepreneurship

    Senators Rubio and Cardin Urge Treasury and SBA to Provide Data Reporting to Congress and the Public on Small Business Relief Programs

    June 3, 2020

    Senators Marco Rubio (R-FL) and Ben Cardin (D-MD), Chairman and Ranking Member of the Senate Committee on Small Business and Entrepreneurship, sent a letter to Steven Mnuchin, Secretary of the Department of the Treasury, and Jovita Carranza, Administrator of the Small Business Administration (SBA), urging the agencies to provide additional data and reporting, including names of borrowers, on the Paycheck Protection Program, Economic Injury Disaster Loan program and Small Business Debt Relief programs as enacted and expanded by the CARES Act. 

    Senator Rubio Chairs Hearing on Main Street Perspectives on COVID-19’s Impact on Small Businesses

    June 3, 2020

    Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, convened a hearing titled, “Perspectives from Main Street: COVID-19’s Impact on Small Business.”

    Federal Agencies

    Department of the Treasury

    Treasury and IRS Announce Delivery of 159 Million Economic Impact Payments

    June 3, 2020

    The Department of the Treasury and Internal Revenue Service (IRS) announced that 159 million Economic Impact Payments, worth more than $267 billion, have been distributed to Americans in two months. Payments have been sent to all eligible Americans for whom the IRS has the necessary information to make a payment. These totals do not include the more than $2.5 billion that has been delivered to U.S. territories for payment to territory residents.

    Federal Reserve Bank of New York

    New York Fed Announces Third “Fed and Main Street” Virtual Forum on the Immigrant Experience during the COVID-19 Crisis

    June 3, 2020

    On Thursday, June 11, 2020, the Federal Reserve Bank of New York will host a virtual forum focused on the perspectives and needs of immigrant communities during the COVID-19 crisis. The event, titled “The Immigrant Experience during COVID-19,” marks the third installment of the Fed and Main Street series, which convenes leaders from the business, community development, nonprofit and policy sectors to discuss the effects of the COVID-19 crisis and efforts to support the recovery.

    FINRA

    COVID-19 Early Retirement Withdrawals

    June 3, 2020

    Staff from the Financial Industry Regulatory Authority, Securities and Exchange Commission and North American Securities Administrators Association have joined together to provide a warning to investors about promoters targeting retirement accounts, in light of the CARES Act provision that allows retirement investors affected by COVID-19 to gain access to up to $100,000 of their retirement savings without being subject to early withdrawal penalties. The guidance also provides a few key considerations for investors thinking of using 401(k) withdrawals or loans to purchase securities.

    International

    European Commission

    EU Budget: Commission Takes Steps to Make €11.5 Billion Available for Crisis Repair and Recovery in 2020

    June 3, 2020

    The Commission has proposed modifications to its budget for 2020 to make €11.5 billion for crisis repair and recovery available already in 2020. Once available, the funds will go to help the regions most in need and support businesses and those in need outside EU borders.

    UK Financial Conduct Authority

    FCA Confirms Guidance for Insurance Firms on Assessing Product Value

    June 3, 2020

    The Financial Conduct Authority issued a release confirming guidance for insurance firms to consider the impact of COVID-19 on the value of their insurance products. The guidance goes into immediate effect and will be reviewed in six months in light of developments regarding COVID-19, and may be revised if appropriate.

    Coronavirus (Covid-19) Financial Resilience Survey

    June 3, 2020

    The Financial Conduct Authority (FCA) issued a statement that it is asking around 13,000 firms to complete a short survey to help the FCA obtain a more accurate view of firms’ financial resilience as a result of COVID-19. The survey will be sent to firms between June 4 and June 8, 2020.

  • Daily Financial Regulation Update - Wednesday, June 3, 2020

    by
    FedACTion Task Force
    | Jun 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”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    Federal Agencies

    Federal Reserve Board

    Coronavirus Pandemic Oversight Challenges

    June 2, 2020

    The Office of the Inspector General of the Board of Governors of the Federal Reserve System (“Board”) issued a release on coronavirus pandemic oversight challenges. According to the release, the scope of the Board’s response so far and its potential future actions must properly address the significant challenges ahead for the broader economy as well as the requirements of the CARES Act.

    Consumer Financial Protection Bureau

    CFPB Provides Guidance on Remittances during COVID-19 Pandemic

    June 2, 2020

    The Consumer Financial Protection Bureau issued Frequently Asked Questions (“FAQs”) on remittances during the COVID-19 pandemic. The FAQs clarify that the failure to deliver remittance transfer funds to a designated recipient by the disclosed date of availability, due to government-mandated closure of commercial activity in the relevant intermediary or recipient countries in response to the COVID-19 pandemic, is not an error under the Remittance Rule if the remittance transfer provider could not have reasonably anticipated the closure. The FAQs also include illustrative examples.

    International

    Bank of England Prudential Regulation Authority

    PRA Statement on the Use of Electronic Signatures to Evidence Forms and Other Documents Delivered to the PRA

    June 2, 2020

    The Prudential Regulation Authority (“PRA”) released a statement that provides information on the use of electronic signatures in relation to the submission of forms and other regulatory documents to the PRA. The PRA confirms that, in the absence of any specific legal provisions to the contrary, firms may use electronic signatures for the submission of forms and regulatory documents, although it may in specific instances request a “wet signature” where it is appropriate to do so. The PRA will review the approach in light of evolving work practices.

    UK Financial Conduct Authority

    FCA Confirms Support for Customers who are Struggling to Pay their Mortgage Due to Coronavirus

    June 2, 2020

    The Financial Conduct Authority (“FCA”) confirmed the support firms should give to mortgage customers who are either coming to the end of a payment holiday or who are yet to request one. The FCA also reminded customers that they should resume payments if they can afford to do so.

  • Daily Financial Regulation Update - Tuesday, June 2, 2020

    by
    FedACTion Task Force
    | Jun 02, 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”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Small Business and Entrepreneurship

    Rubio to Chair Hearing on COVID-19’s Impact on Small Business

    June 1, 2020

    On Wednesday, June 3, 2020, U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, will convene a hearing titled, “Perspectives from Main Street: COVID-19’s Impact on Small Business.” The hearing will focus on the long-term impacts the coronavirus pandemic has had on the small business ecosystem, as well as the U.S. Small Business Administration loan programs authorized by the CARES Act. 
     
    The hearing will be live-streamed on the committee’s website here.

    Federal Agencies

    Conference of State Bank Supervisors

    CSBS Issues Comment Letter on CFPB’s Consideration of Fed-State Coordination in Consumer Finance Law Update

    June 1, 2020

    The Conference of State Bank Supervisors (CSBS) issued a comment letter expressing concerns about the timing and focus of the Consumer Financial Protection Bureau’s (CFPB) request for information (RFI) for recommendations on harmonizing and updating the federal consumer financial laws. Among other things, the CSBS questioned the appropriateness of issuing the RFI during the COVID-19 pandemic, which will likely lead to less public attention and response, and expressed concern that the RFI suggests additional preemption of state laws and state regulatory authority is appropriate.

    Office of the Comptroller of the Currency

    New Acting Comptroller Sounds Warning About Effects of COVID-19 'Lockdowns' on Banking System

    June 1, 2020

    In letters to the National League of Cities, the U.S. Conference of Mayors and the National Association of Governors, Acting Comptroller of the Currency Brian P. Brooks urged mayors and governors to consider the adverse impact of long-term regional economic shutdown on the nation's banks when making their decisions. “Certain aspects of these local orders,” wrote Acting Comptroller Brooks, “potentially threaten the stability and orderly functioning of the financial system the OCC is charged by law to protect.”

    U.S. Small Business Administration

    SBA Publishes “Small Business Facts: Small Business Employment Plummets”

    June 1, 2020

    The U.S. Small Business Administration’s Office of Advocacy published “Small Business Facts” for May 2020, which found that since a declaration of emergency for COVID-19 was issued on March 13, 2020, total private employment dropped by more than 15%. Small businesses employers bore the brunt, with a decline of more than 17%.

    International

    UK Financial Conduct Authority

    FCA Provides Update on Test Case of the Validity of Business Interruption Claims

    June 1, 2020

    The Financial Conduct Authority (FCA) provided an update on progress on its court action on business interruption (BI) insurance policies. Since making its last announcement on May 1, 2020, the FCA has approached 56 insurers, reviewed more than 500 relevant policies from 40 insurers, and has identified a sample of 17 policy wordings that capture the majority of the key issues that could be in dispute. The update gives further detail on the proposed court action, including identifying the representative sample of policy wordings to be examined in the test case, insurers that use those wordings and which of those insurers the FCA has invited, and have agreed, to participate in the proceedings.

  • This Week in Washington for June 1, 2020

    by
    Dina Ellis
    | Jun 01, 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

    Outrage over the death of George Floyd while in police custody in Minneapolis sparked days of protest in cities across the country as Americans advocated for criminal justice reform and racial equality. The demonstrations took a violent turn in some areas over the weekend, leading to riots and looting in commercial centers amid clashes with police and National Guard forces. The now-former officer involved in Mr. Floyd’s death was arrested and charged on Friday with third-degree murder and manslaughter, though three others captured in viral cell phone footage of the incident remain free.

    Coronavirus cases in the country topped 1.8 million, as deaths surpassed the 100,000 mark. While infection rates continue to decline in many areas, others have begun to see an uptick as restrictions are eased. In an interview, Dr. Anthony Fauci expressed some optimism that a vaccine might be available by the end of the year and urged Americans to act “prudently” as states begin to reopen, cautioning that a second wave of infections isn’t inevitable if people follow local guidance.

    The timeline for an additional relief package remains uncertain, as Senate leadership continues to favor a wait-and-see approach. The President voiced his support for a “back-to-work” bonus payment as an alternative to renewing enhanced unemployment benefits, which Republicans have criticized as incentivizing workers to stay home. Senate Democrats in turn have proposed billions in aid to strengthen the nation’s food supply chain. Senate Majority Leader Mitch McConnell continued to stress his commitment to the inclusion of liability protections in any future bill, proposing they be retroactive to December 2019.

    Other highlights of last week include:

    • After sparring with Twitter over the platform’s efforts at fact-checking his posts, the President signed an executive order aimed at challenging the immunity of social media companies that shields them from lawsuits over content on their sites.
    • The President announced on Friday he planned to terminate the country’s relationship with the World Health Organization over disagreements with its response to the coronavirus pandemic.
    • Despite weather related delays, on Saturday the SpaceX capsule carrying two NASA astronauts to the International Space Station successfully launched from Kennedy Space Center in Cape Canaveral, Florida. The astronauts docked and boarded the ISS on Sunday.
    • An additional 2.1 million Americans filed for unemployment last week, as the economic toll of the pandemic continues to be felt across the country.
    • In response to China “unilaterally impos[ing] control over Hong Kong’s security,” the President announced the U.S. will no longer consider Hong Kong autonomous and will revoke its preferential treatment.

    LAST WEEK ON THE HILL

    House Minority Leader Files Suit over Proxy Voting: On Tuesday, House Minority Leader Kevin McCarthy and a group of Republican members filed suit in D.C. District Court challenging the constitutionality of H. Res 965, the House’s plan to vote by proxy, which they called a “brazen violation of the Constitution” and an “unconstitutional power grab.”

    HOUSE FINANCIAL SERVICES COMMITTEE

    Roundtable on “Examining the Impacts of the COVID-19 Pandemic on U.S. Capital Markets”: On Tuesday, the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held a virtual roundtable with capital market experts to examine the impact of the COVID-19 pandemic on capital markets.

    • Christopher Gerold, President, North American Securities Administrators Association and Bureau Chief of the New Jersey Bureau of Securities
    • Heather Slavkin Corzo, Head of U.S. Policy, Principles for Responsible Investment
    • LBrett Palmer, President, Small Business Investor Alliance/li>
    • Tom Quaadman, Executive Vice President, U.S. Chamber Center for Capital Markets Competitiveness

    Roundtable on “Understanding the Cyber Threats and Actors Exploiting the COVID-19 Crisis”: On Thursday, the Subcommittee on National Security, International Development, and Monetary Policy held a virtual roundtable with cybersecurity experts to learn more about efforts to protect consumers from financial cybersecurity-related attacks during the COVID-19 pandemic.

    • Mr. Tom Kellermann, Head of Cybersecurity Strategy, VMware
    • Mr. Guillermo Christensen, Partner, Data Security and Privacy Practice, Ice Miller LLP
    • Mr. Naftali Harris, Co-founder and CEO, SentiLink

    SENATE BANKING COMMITTEE

    Lawmakers Urge CFPB and FHFA to Take Immediate Action to Protect Homeowners: On Wednesday, Sen. Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, led 7 of his Senate colleagues in a letter requesting additional information on the Borrower Protection Program that the CFPB and FHFA announced in April. The agencies’ announcement stated that the CFPB and FHFA would share data under the program but did not say how that data would be used to protect borrowers. The Senators asked the agencies what information they would share and how each agency would use this new program to avoid unnecessary borrower defaults and foreclosures, as well as misinformation, unequal treatment of borrowers, or otherwise address servicers not complying with the law. “It is critical that the CFPB and FHFA act quickly to ensure homeowners across the country can access the relief they need during this national emergency. Any delay could result in unnecessary delinquencies and foreclosures that will set consumers back, rather than helping them recover,” wrote the lawmakers.

    Brown Urges CFPB Director to Extend Taskforce Deadline: On Thursday, Sen. Sherrod Brown (D-OH), ranking member of the Senate Banking Committee, sent a letter to the Consumer Financial Protection Bureau’s Director Kathy Kraninger urging her to extend the deadline from June 1, 2020, to September 1, 2020, for interested parties to respond to Requests for Information by the CFPB’s Taskforce on Federal Consumer Law. Brown argued, “Given the breadth of information requested—and in the midst of a global pandemic and the most severe economic crisis since the Great Depression—that is too short of a response period to ensure meaningful responses.”

    ON THE FLOOR

    House Passes Bill to Ease Restrictions on Paycheck Protection Program, Rejects Reporting Requirements: On Thursday, the House voted 417-1 to pass H.R. 7010, the Paycheck Protection Program Flexibility Act of 2020, which would give businesses an extra 16 weeks beyond the initial 8 to spend the funds and still have loans forgiven, as well as lower the amount that must be spent on payroll from 75% to 60%. The final measure was a scaled back version of the initial proposal, after House leadership faced pushback from labor unions over the potential effects on workers. A separate proposal that would have required the SBA to issue a report on small business virus aid was defeated 269-147.

    President Vetoes Student Loan Forgiveness Measure: On Friday, President Trump vetoed H.J. Res. 76, which disapproves the rule submitted by the Department of Education relating to “Borrower Defense Institutional Accountability.” The President said in a statement that the resolution “sought to reimpose an Obama-era regulation that defined educational fraud so broadly that it threatened to paralyze the nation’s system of higher education.” The House is set to vote in July in an effort to override the veto.

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 7011: Rep. Carolyn Maloney (D-NY) introduced H.R. 7011, which would establish a Pandemic Risk Reinsurance Program.

    H.R. 7018: Rep. Mark Pocan (D-WI) introduced H.R. 7018, which would require the President to use authorities under the Defense Production Act to require emergency production of COVID 19 supplies to address the COVID 19 pandemic.

    H.R. 7023: Rep. Lori Trahan (D-MA) introduced H.R. 7023, which would require the Secretary of the Treasury to implement a program that provides financial assistance to sports facilities, museums, and community theaters.

    H.R. 7046: Rep. Sean Casten (D-IL) introduced H.R. 7046, which would amend the Bank Holding Company Act to place certain limitations on commodity ownership and to repeal the merchant banking authority.

    THIS WEEK ON THE HILL

    Tuesday, June 2

    Senate Banking Committee Hearing on “Implementation of Title IV of the CARES Act”: 10:00 AM via WebEx.

    Wednesday, June 3

    House Financial Services Committee (Subcommittee on Consumer Protection and Financial Institutions) Hearing on “Promoting Inclusive Lending During the Pandemic: Community Development Financial Institutions and Minority Depository Institutions”: 12:00 PM via WebEx.

    Thursday, June 4

    TSenate Banking Committee Hearing on “Crisis in Hong Kong: A Review of U.S. Policy Tools”: 11:00 AM via WebEx.

    THE REGULATORS

    Federal Reserve Board Releases Annual Determination of Aggregate Consolidated Liabilities: On Friday, the Federal Reserve Board released its annual determination of the aggregate consolidated liabilities of financial companies as required by the Dodd-Frank Act. Effective July 1, 2020, aggregate consolidated liabilities equal $21,229,884,414,000. This number, which is the average of the year-end financial sector liabilities of the preceding two years, will be the measure of aggregate consolidated liabilities from July 1, 2020 through June 30, 2021.

    CFTC Unanimously Approves an Interim Final Rule and a Proposed Rule: At an open meeting on Thursday, the CFTC unanimously approved an interim final rule to grant an extension of the compliance schedule for initial margin requirements for uncleared swaps in response to operational challenges certain entities are facing due to the COVID-19 pandemic. The Commission also unanimously approved a proposed rule, which provides an exemption from registration as a commodity pool operator (CPO) for certain foreign persons.

    CFTC to Hold an Open Commission Meeting on June 4: On Thursday, the CFTC announced it will hold an open meeting on Thursday, June 4 at 10:00 a.m. The meeting will be held via conference call in accordance with the agency’s implementation of social distancing due to the COVID-19 pandemic. The Commission will consider: Final Rule: Amendments to Registration and Compliance Requirements for Commodity Pool Operators and Commodity Trading Advisors: Prohibiting Exemptions under Regulation 4.13 on Behalf of Persons Subject to Certain Statutory Disqualifications.

    SEC Reports Spike in COVID-19 Related Fraud Tips, Complaints, and Referrals: Speaking at a webcast hosted by the Securities Industry and Financial Markets Association, Marc Berger, director of the SEC's New York regional office reported, “Since mid-March or so the commission has seen a spike in TCRs . . . as compared to the same period last year. We've opened new investigations, many of which are COVID-related.”

    Small Business Administration and Treasury Department Announce $10 Billion for CDFIs to Participate in the Paycheck Protection Program: On Thursday, the Small Business Administration, in consultation with the Treasury Department, announced that it is setting aside US$10B of Round 2 funding for the Paycheck Protection Program (PPP) to be lent exclusively by Community Development Financial Institutions (CDFIs). CDFIs work to expand economic opportunity in low-income communities by providing access to financial products and services for local residents and businesses. The funds will ensure that entrepreneurs and small business owners in all communities have easy access to the financial system, and that they receive much needed capital to maintain their workforces.

    IRS Issues Advisory Regarding Economic Impact Payments Sent by Prepaid Debit Cards: Amid reports that Americans may be accidentally throwing away the prepaid debit cards containing their economic impact payment, the IRS issued a reminder to the four million individuals receiving their funds via the cards, that the debit cards will arrive in a plain envelope from “Money Network Cardholder Services.”

    Treasury, IRS Provide Safe Harbor for Taxpayers That Develop Renewable Energy Projects: On Wednesday, the Treasury Department and the Internal Revenue Service provided tax relief for taxpayers that develop renewable energy projects that produce electricity from sources such as wind, biomass, geothermal, landfill gas, trash, and hydropower, and use technologies such as solar panels, fuel cells, microturbines, and combined heat and power systems. Because COVID-19 has caused industry-wide delays in the supply chain for components needed to complete renewable energy projects otherwise eligible for important tax credits, the IRS has issued Notice 2020-41 to provide tax relief to affected taxpayers. For some projects that began construction in 2016 or 2017, Notice 2020-41 adds an extra year to the four year "Continuity Safe Harbor" provided in existing guidance, such that if these projects are placed in service in five years, construction will be deemed continuous. Notice 2020-41 also provides a 3½ Month Safe Harbor for services or property paid for by the taxpayer on or after September 16, 2019 and received by October 15, 2020.

    OCC Issues Rule to Clarify Permissible Interest on Transferred Loans: On Friday, the OCC finalized a rule to clarify that when a national bank or savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer continues to be permissible after the transfer. Recent developments, including a decision from the U.S. Court of Appeals for the Second Circuit (Madden v. Midland Funding, LLC), have created legal uncertainty regarding the effect of a transfer on a loan’s permissible interest rate. This final rule addresses this legal uncertainty by clarifying and reaffirming the long-standing understanding that a bank may transfer a loan without affecting the permissible interest term.

    CFPB Study Highlights Challenges Retirees Face to Meet Expenses in Early Years of Retirement: On Wednesday, the CFPB released a first of its kind study examining the financial resources and expenses of retirees during the first five years of retirement among Americans who retired between 1992 and 2014. The study found that 51% of people who retired between 1992 and 2014 had income, savings, and/or non-housing assets to maintain the same spending level for five consecutive years after retiring. In addition, the Bureau found that the ability to maintain the same spending level in the first five years in retirement varies significantly by sex, race, marital status, health status, educational attainment, and generation.

    Freddie Mac Issues Monthly Volume Summary for April 2020: On Tuesday, Freddie Mac announced that it issued its Monthly Volume Summary for April 2020, which provides information on Freddie Mac’s mortgage-related portfolios, securities issuance, risk management, delinquencies, debt activities, and other investments. The summary showed that total mortgage portfolio increased at an annualized rate of 14.3% in April. In addition, single family refinance loan purchase and guarantee volume was US$52.1B, representing 69% of total single family mortgage portfolio purchases and issuances.

    EXIM Approved 186 Small Business Authorizations: On Thursday, the Export-Import Bank of the United States (EXIM) announced that it had approved 186 authorizations totaling US$173.3M in support of 900 American jobs at small businesses that export “Made in the USA” products around the world, according to preliminary estimates.

    THE COURTS

    Department of Justice Files Statement of Interest Challenging the Constitutionality of Maine Governor’s COVID-19 Orders: On Friday, the Department of Justice filed a statement of interest in a Maine federal court in support of a lawsuit filed by campgrounds in Maine—and New Hampshire residents who wish to enjoy them—challenging a measure by Governor Janet Mills in response to COVID‑19 that treats Maine residents more favorably than out-of-state residents when they seek to patronize campgrounds and RV parks within Maine.

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

  • Daily Financial Regulation Update - Saturday, May 30, 2020

    by
    FedACTion Task Force
    | May 30, 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”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. House of Representatives

    Committee on Financial Services

    Waters Announces Virtual Hearings in June

    May 29, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services (Committee), announced the following virtual hearings in the month of June:

    June 3 at 12:00 PM – The Subcommittee on Consumer Protection and Financial Institutions will convene for a hearing entitled, “Promoting Inclusive Lending During the Pandemic: Community Development Financial Institutions and Minority Depository Institutions.”

    June 10 at 12:00 PM – The Subcommittee on Housing, Community Development and Insurance will convene for a hearing entitled, “The Rent Is Still Due: America’s Renters, COVID-19, and an Unprecedented Eviction Crisis.”

    June 11 at 12:00 PM – The Task Force on Financial Technology will convene for a hearing entitled, “Inclusive Banking During a Pandemic: Using FedAccounts and Digital Tools to Improve Delivery of Stimulus Payments.”

    June 16 at 12:00 PM – The Subcommittee on National Security, International Development and Monetary Policy will convene for a hearing entitled, “Cybercriminals and Fraudsters: How Bad Actors Are Exploiting the Financial System During the COVID-19 Pandemic.”

    June 17 at 12:00 PM – The full Committee will convene for a hearing entitled, “Monetary Policy and the State of the Economy.”

    June 25 at 12:00 PM – The Subcommittee on Investor Protection, Entrepreneurship and Capital Markets will convene for a hearing entitled, “Capital Markets and Emergency Lending in the COVID-19 Era.”

    June 26 at 12:00 PM – The Subcommittee on Housing, Community Development and Insurance will convene for a hearing entitled, “Insuring Against a Pandemic: Challenges and Solutions for Policyholders and Insurers.”

    Waters Statement on Treasury and SBA Setting Aside $10 Billion for CDFIs for Paycheck Protection Program

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services (Committee), issued a statement regarding the U.S. Department of the Treasury’s and Small Business Administration’s announcement that it is setting aside $10 billion in Paycheck Protection Program funds to be distributed by Community Development Financial Institutions.

    Federal Agencies

    Federal Reserve Bank of New York

    New York Fed Publishes Blog Post on the U.S. Treasury Markets

    May 29, 2020

    The Federal Reserve Bank of New York published a Liberty Street Economics blog post entitled “Treasury Market Liquidity and the Federal Reserve during the COVID-19 Pandemic” which examines Treasury market liquidity during the COVID-19 crisis through April 2020.

    New York Fed Publishes Blog Post on the Types of Jobs that Bear the Greatest Risk During COVID-19

    May 29, 2020

    The Federal Reserve Bank of New York published a Liberty Street Economics blog post entitled “Which Workers Bear the Burden of Social Distancing Policies?”

    International

    European Banking Authority

    EBA Publishes Guidelines on Loan Origination Standards, Taking into Consideration Significant Transition Periods to Facilitate Implementation

    May 29, 2020

    The European Banking Authority (EBA) published its Guidelines on loan origination and monitoring that expect institutions to develop robust and prudent standards to ensure newly originated loans are assessed properly. The Guidelines also aim to ensure that the institutions’ practices are aligned with consumer protection rules and respect fair treatment of consumers.

    Bank of England Prudential Regulatory Authority

    PRA Publishes Q&A on Capital Requirements Regulation Requirements for Property Valuations

    May 29, 2020

    The Prudential Regulatory Authority published a set of Q&As answering some commonly asked questions regarding residential and commercial property valuations for Capital Requirements Regulation purposes during the period of disruption caused by COVID-19.

  • U.S. Policymakers Look to Limit Reliance on Manufacturing in China

    by
    Tom Best, Derek Turnbull
    | May 29, 2020

    On April 3, 2020, in response to a critical shortage of personal protective equipment (PPE) in the United States amidst the evolving public health crisis brought on by the COVID-19 pandemic, the U.S. Food and Drug Administration (FDA) issued an Emergency Use Authorization allowing the importation of certain N95-style respirators manufactured in China.[1]  Previously, these masks had not been authorized by U.S. regulators for importation as approved medical devices, as N95 masks must adhere to strict standards on effectiveness and many manufacturers in China, though prolific producers of respirators, did not technically produce approved N95s.  By the end of April, more than 74 manufacturers had made the list approved for producing N95-style masks and millions of respirators produced by those companies began to flow into the U.S.  On May 7, 2020, however, the FDA pulled its list of authorized producers and re-issued a revised list with just 14 manufacturers named, severely restricting the flow of new PPE from China.

    What happened in the interim?  Just days earlier, the Wall Street Journal had published a story on findings by the National Institute for Occupational Safety and Health (the federal agency responsible for propagating N95 respirators’ qualifications) that 60% of 67 types of imported masks had at least one sample tested which failed to meet the standards normally required of N95 masks.  While N95s must normally block out 95% of small particles, one sample tested came in below 15% effectiveness, despite markings designating it as a KN95 (China’s approximately equivalent version of the N95 mask) – below even the effectiveness levels found for some cloth masks.

    The FDA’s reversal may provide a warning for companies with Chinese supply chains regarding broader changes to come.  It builds, after all, on a narrative regarding the quality of Chinese-made products long in the making, and follows on the heels of a series of pandemic-related scandals in Europe with faulty imported COVID-19 tests having to be returned to their manufacturers in China.  In March, Bloomberg News reported on the Czech Republic’s delicate dance in deferentially thanking the Chinese government for its assistance in obtaining 300,000 rapid-acting tests for the virus which turned out only to work days after many patients would already have become contagious, with approximately one third of the tests not even doing that properly.  50,000 test kits were returned by Spain, one of the countries experiencing among the worst outbreaks in the world.  The reputational damage of mounting problems around tests and PPE led the Chinese government in early April to impose new restrictions on PPE exports, requiring Chinese government inspections and approval before companies could continue exporting certain PPE products.

    Negative coverage of “Made in China” products has been seen before.  In 2007, the New York Times covered the significant number of children’s toys recalled after the factories where they were produced in China were found to be using lead paint and other dangerous materials.  And product quality issues have frequently been in the news in China, from the death penalties meted out in the wake of the 2008 melamine-tainted powdered milk scandal to the outcry over the more recent 2018 faulty children’s vaccines scandal.  Indeed, the Chinese government acknowledges the problem and its recent restrictions on PPE exports are purportedly in part to limit the international reputational damage of faulty product exports.  But the coronavirus pandemic may have brought these issues to a head in many parts of the world, and U.S. authorities in particular – regardless of apparently more effective Chinese manufacturing regulation – may be seizing their chance to limit the importation of a variety of Chinese manufactured goods across a number of industries.

    The FDA has not acted alone in recently imposing additional trade barriers on Chinese goods.  Days before the FDA’s abrupt rollback of its Chinese PPE approved manufacturer list, the White House issued an executive order banning the purchase of certain power grid components from suppliers owned or controlled by, or subject to the jurisdiction of, “foreign adversaries” – a move generally seen as directed at halting the use of Chinese or Russian-supplied parts in the power grid.  Meanwhile, even as certain tariffs introduced on Chinese imports in 2018 and 2019 remain in place following the signing of the Phase I trade deal in January, new tariffs have been threatened in connection with the coronavirus crisis.  And on May 14, the White House issued an executive order giving new powers to the International Development Finance Corporation – the U.S. overseas investment agency – to help foster domestic U.S. supply chains and manufacturing relevant to responding to the pandemic, a move widely seen as looking to reduce U.S. dependence on (among others) Chinese supply chains for critical goods.  Then on May 19, the administration announced that the Biomedical Advanced Research and Development Authority had awarded a $354 million contract to a U.S. company to develop domestic production of a number of medicines and their precursors, including but not limited to drugs relevant to the pandemic.  Administration officials reportedly billed the contract as part of a wider effort to bring pharmaceutical manufacturing stateside on a broader scale.

    As the crisis wears on, one should not be surprised as the U.S. government seizes further opportunities to restrict trade with China, and companies around the world should be cognizant of the risks these circumstances pose to their supply chains.  The simultaneous erosion of confidence in certain Chinese-made goods and apparent deterioration in U.S.-China relations may accelerate a shift that was already occurring in the trade relationship between the world’s two largest economies.  While the exact outcome of this dual crisis – and, indeed, what the world will look like as the virus subsides – remains in doubt, the trend in a U.S. pullback in purchasing from China appears clear.  As part of the real-time assessments of risks many companies are doubtless undertaking in light of the pandemic’s business disruptions, companies across industries selling into the United States would be wise to plan for prolonged disruptions to any portion of their supply chains originating in or passing through China.  The cessation of the pandemic may not result in an immediate cessation of trade hostilities, and while much attention has been paid to increasing U.S. export controls directed at China, America’s importation restrictions are also expanding and may have similarly long-lasting effects.  With PPE and power grid components in the U.S. government’s sights today, steel, plastics, or other products or parts could become targets tomorrow, and any company might benefit from having a contingency plan in place.


    [1] “Respirators,” also sometimes called respirator masks, are masks designed to create airtight seals or fit closely to the face and efficiently filter out tiny airborne particles.

  • Daily Financial Regulation Update - Friday, May 29, 2020

    by
    FedACTion Task Force
    | May 29, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    SBA and Treasury Announce $10 Billion for CDFIs to Participate in PPP

    May 28, 2020

    The Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury (Treasury), announced that it is setting aside $10 billion of Round 2 funding for the Paycheck Protection Program (PPP), to be lent exclusively by Community Development Financial Institutions (CDFIs). CDFIs work to expand economic opportunity in low-income communities by providing access to financial products and services for local residents and businesses.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Banking, Housing, and Urban Affairs

    Senator Brown, Colleagues Seek Answers from Administration on the Borrower Protection Program

    May 28, 2020

    U.S. Senator Sherrod Brown (D-OH), Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and seven other U.S. Senators, sent a letter to Kathleen Kraninger, Director of the Consumer Financial Protection Bureau (CFPB), and Mark Calabria, Director of the Federal Housing Finance Agency (FHFA), requesting additional information on the Borrower Protection Program (BPP) announced in April by the CFPB and FHFA. The agencies’ April announcement stated that the CFPB would share consumer complaint data and analytics with the FHFA, and that the FHFA would provide the CFPB with its internal data on mortgage forbearances, modifications and other loss mitigation efforts. In the letter, the Senators asked what information the agencies would share, and how the agencies would use the BPP to avoid unnecessary borrower defaults and foreclosures, misinformation and unequal treatment of borrowers, and to otherwise address servicers not complying with the law. 

    Federal Agencies

    Federal Reserve Bank of Boston

    Boston Fed Releases Article on Working Cities Challenge Model in COVID-19

    May 28, 2020

    The Federal Reserve Bank of Boston (Boston Fed) released an article titled “A Pandemic Tests the Working Cities Challenge Model: Does it Work in a Crisis?” In the article, the Boston Fed explored whether the Working Cities Challenge model is working in the face of COVID-19. The Working Cities Challenge model is an initiative of the Boston Fed that is active in 12 small cities in Connecticut, Massachusetts, and Rhode Island, and more communities through the affiliated Working Communities Challenge in Vermont. The model aims to revive communities through collaboration between groups that might not organically interact, such as faith-based and business groups.

    FINRA

    FINRA Shares Remote Work Practices Implemented by Firms

    May 28, 2020

    The Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 20-16, in which it shared common themes FINRA observed through discussions with small, mid-size and large firms about the steps those firms reported taking to transition their associated persons and supervisory procedures to a remote work environment due to COVID-19.

    U.S. Small Business Association

    SBA Outlines Export Strategies During COVID-19

    May 28, 2020

    In a bulletin titled “5 Export Strategies for COVID-19 Times from SBA’s Office of International Trade”, the Small Business Administration (SBA) outlined five export strategies to help small business clients during COVID-19.

    Fannie Mae

    Fannie Mae Issues Lender Letters

    May 28, 2020

    Fannie Mae issued two Lender Letters, designed to address questions and concerns raised by industry partners, on COVID-19’s impact on Originations and Appraisals.

    Freddie Mac

    Freddie Mac Issues Bulletin Providing Selling Guidance Related to COVID-19

    Freddie Mac issued Bulletin 2020-19 (Bulletin), in which it provided temporary requirements and guidance for borrowers with qualifying income derived from self-employment; temporary flexibilities for CHOICERenovation mortgages; delivery requirements for “no cash-out” refinance mortgages; and, temporary eligibility requirements related to the purchase of delinquent mortgages in forbearance. In the Bulletin, Freddie Mac also reminded sellers of additional resources, including its Selling FAQs.

    Department of Labor

    Department of Labor Issues News Release on Unemployment Insurance Weekly Claims

    May 28, 2020

    In a News Release regarding unemployment insurance weekly claims, the U.S. Department of Labor reported that in the week ending May 23, 2020, the advance figure for seasonally adjusted initial claims was 2,123,000, a decrease of 323,000 from the previous week’s revised level; the previous week’s level was revised up by 8,000 from 2,438,000 to 2,446,000; the 4-week moving average was 2,608,000, a decrease of 436,000 from the previous week’s revised average; and, the previous week’s average was revised up by 2,000 from 3,042,000 to 3,044,000.

    International

    Bank of England

    Monetary Policy Committee Member Gives Speech on COVID-19 and Monetary Policy

    May 28, 2020

    Michael Saunders, External Member of the Bank of England’s Monetary Policy Committee, gave a speech titled “COVID-19 and Monetary Policy.” In the speech, Mr. Saunders argued that after the significant decline in output in recent months, some recovery in economic activity is likely as lockdowns ease; risks are more on the side of a relatively slow recovery; a weaker recovery would be especially damaging, because it would increase long-term costs from scarring on potential growth; and, as a result, risk management considerations favor a relatively prompt and aggressive response to downside risks.

  • Proposed “California Privacy Rights Act” Explained (with Redline)

    by
    Sundeep Kapur
    | May 28, 2020

    The California Privacy Rights Act (the “CPRA”) has enough signatures to qualify for inclusion in California’s November 2020 ballot. Though we still await the California AG’s final regulations on the CCPA, the CPRA would build upon the CCPA to impose additional requirements, such as:

    1. Requiring a right of opt-out for “cross-context behavioral advertising,” regardless of whether such activity includes a “sale”;
    2. Requiring a right of opt-out for limiting certain use of “sensitive personal information” (e.g., Social Security Number, driver’s license number, precise geolocation, financial account information);
    3. Allowing consumers to submit requests for “correction” of personal information;
    4. Requiring additional provisions in contracts between (a) businesses and (b) service providers or contractors, such as an obligation of express notice if a service provider or contractor cannot meet its obligations to such businesses; and
    5. Requiring businesses to pass down deletion requests to third parties to whom they have sold personal information.

    Click here for an unofficial redline .PDF of the CPRA, as prepared by Paul Hastings, which more clearly shows how it modifies the CCPA.

  • Daily Financial Regulation Update -Thursday, May 28, 2020

    by
    FedACTion Task Force
    | May 28, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Federal Reserve Bank of Boston

    Boston Fed Releases Additional Information for Potential Lenders and Borrowers in the Main Street Lending Program

    May 27, 2020

    The Federal Reserve Bank of Boston released additional information for potential lenders and borrowers in the Main Street Lending Program, including a form loan participation agreement, lender certifications and covenants, borrower certifications and covenants, updated Frequently Asked Questions and other legal documents.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    Federal Agencies

    Department of the Treasury

    SBA and Treasury Revise Paycheck Protection Program FAQ 45

    May 27, 2020

    The Small Business Administration and U.S. Department of Treasury revised Paycheck Protection Program (PPP) FAQ Question 45 (and related footnote 19) to update the safe harbor deadline for repaying a PPP loan to be eligible for the Employee Retention Credit (ERC). Employers who repaid their PPP loans by May 18, 2020 (revised from May 14, 2020) will be treated as though they had not received a covered PPP loan and thus remain eligible for the ERC.

    Federal Reserve Board

    Agencies Issue FAQs on CRA Consideration for Activities in Response to the Coronavirus

    May 27, 2020

    The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (collectively, the Agencies) issued Frequently Asked Questions (FAQs) on Community Reinvestment Act (CRA) consideration for activities in response to COVID-19. The FAQs provide additional clarification of the information included in the Agencies’ Joint Statement on CRA Consideration for Activities in Response to COVID-19 issued March 19, 2020.

    Federal Reserve Updates Beige Book

    May 27, 2020

    The Federal Reserve System released its May 2020 Beige Book, which summarizes commentary on current economic conditions by Federal Reserve District. According to the report, economic activity declined in all districts – falling sharply in most – reflecting disruptions associated with the COVID-19 pandemic. Consumer spending fell further as mandated closures of retail establishments remained largely in place during most of the survey period. Declines were especially severe in the leisure and hospitality sector, with very little activity at travel and tourism businesses. Auto sales were substantially lower than a year ago, although several districts noted recent improvement.

    Federal Reserve Bank of New York

    New York Fed Posts Article on Job Training Mismatch and the COVID-19 Recovery: “A Cautionary Note from the Great Recession”

    May 27, 2020

    As part of its Liberty Street Economics web series, the Federal Reserve Bank of New York posted an article written by members of its Research and Statistics Group that discusses the role that workforce development programs may have in bridging worker skills gaps during the COVID-19 pandemic. In response to COVID-19, firms with products and services that complement social distancing may continue hiring during and beyond the recovery, while workers displaced from higher-risk industries are left to adjust to unfamiliar job opportunities. In light of difficulties that workforce development programs face in adjusting to uncertain structural changes, the article suggests that “wage insurance” cash transfers that subsidize some of the difference between prior and new jobs may be a more nimble solution than these programs.

    Pandemic Response Accountability Committee

    Pandemic Response Accountability Committee Announces Public Forum on June 3

    May 26, 2020

    Michael E. Horowitz, Acting Chair of the Pandemic Response Accountability Committee (PRAC), announced that the PRAC will hold a virtual public listening forum entitled, “Stakeholder Perspectives on Oversight of the Federal COVID-19 Spending and Response,” on June 3, 2020 at 2:00 pm, Eastern. The PRAC is composed of 20 Inspectors General from across the federal government leading efforts to promote transparency and support and conduct oversight of payments to individual citizens, loans for businesses, support for hospitals and other medical providers, and economic relief for impacted industries.

    Fannie Mae

    Fannie Mae Issues Payment Deferral Lender Letter

    May 27, 2020

    Fannie May issued a Lender Letter (LL-2020-05) addressed to all Fannie Mae Single-Family Services which introduces payment deferral, a new home retention workout option that enables servicers to assist eligible borrowers who have resolved a temporary hardship and resumed their monthly contractual payments but cannot afford either a full reinstatement or repayment plan to bring the loan current.

    Department of Labor

    U.S. Department of Labor Awards Nearly $24 Million in Dislocated Worker Grants in Response to the Coronavirus Pandemic

    May 27, 2020

    The U.S. Department of Labor announced the award of four Dislocated Worker Grants (DWGs) totaling approximately $24 million to help address the workforce-related impacts of the public health emergency related to COVID-19. The awards are funded under the CARES Act, which provided $345 million for DWGs to prevent, prepare for and respond to the pandemic. This latest award follows four previous waves of funding, bringing the total amount awarded to states and territories to approximately $222 million.

  • Daily Financial Regulation Update - Wednesday, May 27, 2020

    by
    FedACTion Task Force
    | May 27, 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”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. House of Representatives

    Committee on Financial Services

    Committee Holds Bipartisan Virtual Roundtable on Impact of COVID-19 on Capital Markets

    May 26, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee (Committee), announced that Congressman Brad Sherman (D-CA), Chairman of the Subcommittee on Investor Protection, Entrepeneurship, and Capital Markets (Subcommittee), and Congressman Bill Huizinga (R-MI), Ranking Member of the Subcommittee, held a virtual roundtable entitled, “Examining the Impacts of the COVID-19 Pandemic on U.S. Capital Markets.” A video recording of the roundtable will be made available on the Committee’s Majority and Minority websites after the roundtable’s conclusion.

    Federal Agencies

    Federal Reserve Board

    Board Releases Discount Rate Meeting Minutes

    May 25, 2020

    The Board of Governors of the Federal Reserve System released the minutes of its discount rate meeting held on April 29, 2020.

    Federal Reserve Bank of New York

    Federal Reserve Bank of New York Releases Updated Frequently Asked Questions for CPFF, PMCCF, SMCCF, and TALF

    May 26, 2020

    The Federal Reserve Bank of New York (FRBNY) released updated FAQs for the Commercial Paper Funding Facility (CPFF), the Primary Market and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) and the Term Asset-Backed Securities Loan Facility (TALF). The updates include clarification about the nationally-recognized statistical rating organizations from which the facilities will accept ratings. The FRBNY also posted an updated Form of Issuer and Sponsor Certification as to TALF Eligibility for ABS.

    New York Fed Publishes Blog Post on the Primary and Secondary Market Corporate Credit Facilities

    May 26, 2020

    The Federal Reserve Bank of New York published a Liberty Street Economics blog post entitled “The Primary and Secondary Market Corporate Credit Facilities” which discusses the dislocations in the corporate bond markets that motivated the creation of the Primary Market and Secondary Market Corporate Credit Facilities.

    Center for Microeconomic Data Releases Findings from SCE Public Policy Survey

    May 26, 2020

    The Federal Reserve Bank of New York Center for Microeconomic Data released findings from its April 2020 Survey of Consumer Expectations Public Policy Survey.

    New York Fed Publishes Blog Post on the Findings from SCE Public Policy Survey

    May 26, 2020

    The Federal Reserve Bank of New York (FRBNY) published a Liberty Street Economics blog post entitled “Consumers Increasingly Expect Additional Government Support amid COVID-19 Pandemic” which discusses the findings from the FRBNY’s April 2020 Survey of Consumer Expectations Public Policy Survey.

    Office of the Comptroller of the Currency

    OCC Issues Interim Final Rule on Director, Shareholder, and Member Meetings for FSAs and National Banks

    May 26, 2020

    The Office of the Comptroller of the Currency (OCC) issued an interim final rule amending its regulations to clarify that national banks and federal savings associations (FSAs) may permit telephonic and electronic participation at all board of directors, shareholder and member meetings. According to the OCC, the interim final rule will allow national banks and FSAs to conduct necessary meetings remotely during the COVID-19 pandemic as well as during any other future emergency when in-person meetings may not be feasible. The interim final rule is effective on May 28, 2020. Comments on the interim final rule must be received no later than July 13, 2020.

    Fannie Mae

    Fannie Mae Launches "Here to Help"

    May 26, 2020

    Fannie Mae launched “Here to Help,” an online education effort designed to assist homeowners and renters navigate available options in response to financial hardships caused by COVID-19. The new online portal is available at KnowYourOptions.com.

    Freddie Mac

    Freddie Mac Announces Online Resources Designed to Help Consumers

    May 26, 2020

    Freddie Mac announced several online resources intended to assist homeowners and renters navigate the relief and support the agency has made available in response to COVID-19.

    Ginnie Mae

    Ginnie Mae Releases May 2020 GMAR

    May 26, 2020

    Ginnie Mae released its Global Market Analysis Report (GMAR) for May 2020. Highlights of the new GMAR include, among others, findings that in the first quarter of 2020, first lien originations totaled $670 billion, up from $355 billion in the first quarter of 2019.

  • This Week in Washington for May 26, 2020

    by
    Dina Ellis
    | May 26, 2020

    THE BIG PICTURE

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

    The clash between concern over public health and concern over the potential for lasting damage to the economy dominated the news cycle as officials in states around the country struggled to strike the right balance as they begin to reopen. The death toll neared a grim milestone, approaching 100,000, as the President ordered flags at federal buildings be flown at half-staff to honor the victims. Task Force Coordinator Dr. Deborah Birx stressed the continued importance of social distancing, warning there is still “significant circulation” of the virus in some regions, including the D.C. metropolitan area, which has the highest rate of positive cases in the country. On Friday, the President announced he would issue guidance deeming houses of worship as “essential,” in order to allow them to reopen, despite concern over the risk of spread.

    Negotiations over the parameters of an additional relief package stalled last week, as the President and Republican leadership expressed confidence that an economic rebound after states begin to reopen would reduce the need for government intervention. Senate Minority Leader Chuck Schumer struck a different tone, warning that the American public would force Congress to act as high levels of unemployment continue to have a domino effect throughout the economy. Treasury Secretary Steven Mnuchin acknowledged another measure would likely be necessary to stabilize the economy. One issue on which there was bipartisan agreement was on technical fixes to the Small Business Administration’s Paycheck Protection Program, although the Senate and House have crafted different proposals to ease PPP restrictions and extend deadlines. The House is expected to vote on their measure this week.

    Other highlights of last week include:

    • On Sunday, amid a surge of COVID-19 cases in Brazil, the President announced he was moving to restrict travel from the country.
    • An additional 2.4 million Americans filed for unemployment last week, bringing the total since the outset of the pandemic to nearly 39 million.
    • The President gave notice that he plans to withdraw the United States from the Open Skies treaty, which allows countries to conduct unarmed surveillance flights in a bid to promote trust and transparency, claiming that Russia has violated the terms.
    • The Senate voted 49-44 to approve the nomination of Rep. John Ratcliffe to serve as the next Director of National Intelligence. Current Acting Director Richard Grenell announced he would not return to his post as U.S. Ambassador to Germany.
    • On a party-line vote, the Senate Homeland Security and Governmental Affairs Committee authorized a subpoena as part of a Republican led probe of Hunter Biden.

    LAST WEEK ON THE HILL

    HOUSE FINANCIAL SERVICES COMMITTEE

    Bipartisan Roundtable on “Reviewing the Impact of the COVID-19 Pandemic on U.S. Housing Markets”: On Friday, the Subcommittee on Housing, Community Development, and Insurance Subcommittee held a virtual roundtable to review the impact of the COVID-19 pandemic on U.S. housing markets.

    • Diane Yentel, President and CEO, National Low Income Housing Coalition
    • Kristy W. Fercho, Vice Chairman, Mortgage Bankers Association
    • Jenny Schuetz, Metropolitan Policy Program Fellow, Brookings Institution

    SENATE BANKING COMMITTEE

    Hearing on “The Quarterly CARES Act Report to Congress”: On Tuesday, the full Committee held a virtual hearing to receive an update regarding the obligations of the Treasury Department and the Federal Reserve, and transactions entered into, under the CARES Act. Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell projected that the Main Street facility and the municipal facility, intended to help midsize businesses and municipalities, would be up and running by the end of the month. Mnuchin told the panel that he had already pledged US$195B of the US$500B allocated under the CARES Act and planned to exhaust the funds to prop up the economy through direct lending, but he urged the reopening of the country, warning “there is the risk of permanent damage” to the economy.

    • Steven Mnuchin, Secretary, Department of the Treasury
    • Jerome Powell, Chairman, Board of Governors of the Federal Reserve System

    ON THE FLOOR

    Senate Passes Holding Foreign Companies Accountable Act: On Wednesday, the Senate voted unanimously to pass the Holding Foreign Companies Accountable Act. The measure, first introduced by Senators John Kennedy (R-LA) and Chris Van Hollen (D-MD), would prohibit securities of a company from being listed on any of the U.S. securities exchanges if the company has failed to comply with the Public Company Accounting Oversight Board’s (PCAOB) audits for three years in a row. The bill would also require public companies to disclose whether they are owned or controlled by a foreign government, including China’s communist government. Van Hollen praised the measure’s passage, saying “for too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards.”

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 6918: Rep. Pramila Jayapal (D-WA) introduced H.R. 6918, which would direct the Secretary of the Treasury to establish a grant program for employers adversely affected by COVID-19.

    H.R. 6934: Rep. Madeleine Dean (D-PA) introduced H.R. 6934, which would amend the CARES Act to require the uniform treatment of nationally recognized statistical rating organizations under certain programs carried out in response to the COVID-19 emergency.

    H.R. 6938: Rep. Brett Guthrie (R-KY) introduced H.R. 6938, which would require the Secretary of Commerce and the Federal Trade Commission to conduct a study on blockchain technology.

    H.R. 6952: Rep. Bradley Schneider (D-IL) introduced H.R. 6952, which would direct the President to appoint a Medical Supplies Response Coordinator to coordinate the efforts of the Federal Government regarding the supply and distribution of certain supplies and equipment relating to COVID-19.

    H.R. 6974: Rep. Anthony Gonzalez (R-OH) introduced H.R. 6974, which would require the Secretary of the Treasury to pursue more equitable treatment of Taiwan at the international financial institutions.

    H.R. 6983: Rep. Carolyn Maloney (D-NY) introduced H.R. 6983, which would establish a Pandemic Risk Reinsurance Program.

    H.R. 6994: Rep. Dean Phillips (D-MN) introduced H.R. 6994, which would direct the SEC to revise any rules necessary to enable issuers of index-linked annuities to use the securities offering forms that are available to other issuers of securities.

    H.R. 7000: Rep. Brad Sherman (D-CA) introduced H.R. 7000, which would mend the Sarbanes Oxley Act of 2002 to require certain issuers to disclose to the SEC information regarding foreign jurisdictions that prevent the PCAOB from performing inspections under that Act.

    S. 3793: Sen. Mark Warner (D-VA) introduced S. 3793, which would amend the CARES Act to modify the employee retention tax credit to secure the paychecks and benefits of workers, to provide a refundable credit against payroll taxes for the operating costs of employers, to amend the Internal Revenue Code of 1986 to provide a small business rebate.

    S. 3805: Sen. Angus King (I-ME) introduced S. 3805, which would amend the Small Business Act and the CARES Act to modify certain provisions related to the forgiveness of loans under the paycheck protection program, to allow recipients of loan forgiveness under the paycheck protection program to defer payroll taxes.

    S. 3814: Sen. Michael Bennet (D-CO) introduced S. 3814, which would establish a loan program for businesses affected by COVID-19 and to extend the loan forgiveness period for paycheck protection program loans made to the hardest hit businesses.

    S. 3830: Sen. Dan Sullivan (R-AK) introduced S. 3830, which would amend title 31, United States Code, to authorize the issuance of United States Pandemic Bonds to aid in the funding of relief efforts related to COVID-19.

    S. 3834: Sen. Mike Braun (R-IN) introduced S. 3834, which would require the Secretary of the Treasury to provide estimates of the use of taxpayer funds by the United States Government.

    S. 3841: Sen. Chuck Grassley (R-IA) introduced S. 3841, which would protect 2020 recovery rebates for individuals from assignment or garnishment.

    THIS WEEK ON THE HILL

    The Senate is out on Memorial Day recess, and is set to return to Washington on June 1st. The House remains in session and has triggered its proxy and remote procedures.

    THE REGULATORS

    OCC Finalizes Revisions to Community Reinvestment Act Regulations: On Wednesday, the OCC released a final rule intended to strengthen and modernize the agency’s regulations under the Community Reinvestment Act. The CRA was enacted in 1977 to encourage insured depository institutions to help meet the credit needs in their local communities, including low- and moderate-income neighborhoods. The agency touted that the final rule preserves this important objective but responds to dramatic changes in the banking industry since the law’s enactment and regulatory changes in 1995. The FDIC and Federal Reserve declined to sign onto the final rule. Congressional Democrats were quick to criticize the move as rushed and said the rule would “be harmful for so many communities across the country at a time when they are under severe distress due to the pandemic.” Senate Banking Committee Chairman Sherrod Brown (D-OH) argued, “Comptroller Otting has ignored thousands of thoughtful comments from civil rights leaders, community development advocates, and local leaders and rammed through a [flawed] overhaul.”

    Federal Agencies Share Principles for Offering Responsible Small-Dollar Loans: On Wednesday, the Federal Reserve Board, FDIC, NCUA, and OCC issued principles for offering small-dollar loans in a responsible manner to meet financial institutions customers' short-term credit needs. The “Interagency Lending Principles for Offering Responsible Small-Dollar Loans” principles encourage supervised banks, savings associations, and credit unions to offer responsible small dollar loans to customers for consumer and small business purposes.

    SEC Staff to Host July 9 Roundtable on Emerging Markets: On Tuesday, the SEC announced July 9 as the date for its staff roundtable to hear the views of investors, other market participants, regulators, and industry experts on the risks of investing in emerging markets, including China.

    SEC Announces 2020 Small Business Forum, to Be Held Virtually: On Wednesday, the SEC announced it will virtually host its 39th annual Government-Business Forum on Small Business Capital Formation on the afternoon of June 18. The Forum is a unique event where members of the public and private sectors gather to craft suggestions for policy impacting emerging businesses and their investors, from startups to smaller public companies. The event will feature discussions about women-owned, minority-owned, and rural businesses and their investors, as well as the potential paths for the next generation of publicly-owned companies.

    SEC Adopts Amendments to Improve Financial Disclosures about Acquisitions and Dispositions of Businesses: On Thursday, the SEC announced that it has voted to adopt amendments to its rules and forms to improve for investors the financial information about acquired or disposed businesses, facilitate more timely access to capital, and reduce the complexity and costs to prepare the disclosure. The amendments will update rules which have not been comprehensively addressed since their adoption, some over 30 years ago.

    SEC Reschedules Virtual Conference on Municipal Securities Disclosure: On Friday, the SEC announced that it has rescheduled its conference entitled “Spotlight on Transparency: A Discussion of Secondary Market Municipal Securities Disclosure Practices” for June 16. The conference will bring together a variety of municipal securities market participants, including issuers and investors, to discuss the state of secondary market disclosure in the municipal securities market, including COVID-19 related disclosure and potential opportunities for regulatory and industry improvement.

    CFTC Division of Enforcement Issues Civil Monetary Penalty Guidance: On Wednesday, the CFTC announced that its Division of Enforcement had issued new guidance outlining factors the Division considers in recommending civil monetary penalties (CMPs) to the Commission to be imposed in CFTC enforcement actions. This is the first Division CMP guidance issued publicly since the Commission published its penalty guidelines in 1994. “This new guidance reflects my strong commitment to transparency and to the CFTC’s enforcement mission,” said CFTC Chairman Heath Tarbert, “Clarity about how our statutes and rules are applied is essential to deterring misconduct and maintaining market integrity.”

    CFTC to Hold an Open Commission Meeting: On Thursday, the CFTC announced that it will hold an open meeting on Thursday, May 28, at 10:00 a.m. The Commission will consider the following: (1) Proposed Rule: Amending Regulation 3.10(c)(3) - Providing an Exemption from Registration for Foreign Persons Acting As Commodity Pool Operators (CPOs) on Behalf of Offshore Commodity Pools; (2) Interim Final Rule: Amending Regulation 23.161 - Extending the Compliance Schedule for Initial Margin Requirements for Uncleared Swaps in Response to the COVID-19 Pandemic.

    CFPB to Provide Additional Extension of Comment Period for Supplemental Notice of Proposed Rulemaking on Time Barred Debt: On Tuesday, the CFPB announced that it will provide an additional 60 days for the public to comment on its Supplemental Notice of Proposed Rulemaking (NPRM) on time-barred debt disclosures. In the NPRM, the Bureau proposes to prohibit collectors from using non-litigation means (such as calls) to collect on time-barred debt unless collectors disclose to consumers during the initial contact and on any required validation notice that the debt is time-barred. The deadline was June 5; the comment period will now close on August 4.

    CFPB Releases Video on Consumers Receiving Stimulus Payment on Prepaid Debit Card: On Tuesday, the CFPB released a video to inform consumers that they may receive their Economic Impact Payment (EIP) on a prepaid debit card starting this week. The payments, to provide relief as a result of the COVID-19 pandemic, were made possible by the CARES Act. To assist getting economic impact payments quicker to consumers, the Bureau took action by issuing an interpretive rule last month making it easier for pandemic-relief payments to be made on a prepaid debit card.

    CFPB Takes Action to Help Struggling Homeowners Seeking Loss Mitigation Efforts; Consumers Seeking Small-Dollar Loans: On Friday, the CFPB announced that it issued two No-Action Letter (NAL) Templates under its innovation policies. Using the first NAL Template approved, mortgage servicers seeking to assist struggling borrowers to avoid foreclosure and engage in loss mitigation efforts would be able to apply for their own NAL. To further competition in the small-dollar lending space and facilitate robust competition that fosters access to credit, the Bureau also approved a NAL template that insured depository institutions can use to apply for a NAL covering their small-dollar credit products. The NAL template includes important protections for consumers who seek small-dollar loan products.

    Freddie Mac Announces Temporary Purchase and Refinance Eligibility Requirements for Borrowers with Existing Mortgages: On Tuesday, Freddie Mac announced temporary requirements and guidance that apply to borrowers who are currently in forbearance or recently ended their forbearance and wish to take advantage of low mortgage rates to purchase or refinance their home. A borrower with outstanding mortgages, including mortgages in forbearance, may qualify for a new purchase or refinance mortgage that will be eligible for sale to Freddie Mac as long as they have continued to make timely payments on their outstanding mortgages. In addition, a purchase or refinance mortgage may be eligible if the borrower missed payments on the mortgage being refinanced or another outstanding mortgage but subsequently reinstated the mortgage.

    FHFA Announces Refinance and Home Purchase Eligibility for Borrowers in Forbearance: On Tuesday, the FHFA announced that Fannie Mae and Freddie Mac (the Enterprises) have issued temporary guidance regarding the eligibility of borrowers who are in forbearance, or have recently ended their forbearance, looking to refinance or buy a new home. Borrowers are eligible to refinance or buy a new home if they are current on their mortgage (i.e. in forbearance but continued to make their mortgage payments or reinstated their mortgage). Borrowers are eligible to refinance or buy a new home three months after their forbearance ends, and they have made three consecutive payments under their repayment plan or payment deferral option or loan modification.

    FHFA Releases Re-Proposed Capital Rule for the Enterprises: On Wednesday, the FHFA announced that it is seeking comments on a notice of proposed rulemaking that establishes a new regulatory capital framework for Fannie Mae and Freddie Mac (the Enterprises). The proposed rule is a re-proposal of the notice of proposed rulemaking published in July 2018. The 2018 proposal remains the foundation of the re-proposal. The enhancements in the new proposal preserve the mortgage risk-sensitive framework of the 2018 proposal, while increasing the quantity and quality of the Enterprises' regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements.

    EXIM Board Adopts Key Reforms to Increase Transparency and Protect U.S. Taxpayers: On Friday, the Board of Directors of the Export-Import Bank of the United States (EXIM) took unanimous action to reform two important EXIM procedures—economic impact and additionality—following an eleven-month review process. The Board of Directors voted to amend the agency’s economic impact procedures to better assess the potential impacts of its pending transactions on relevant domestic industries. The Board also approved guidelines to strengthen the agency’s determination of “additionality”—the reason why a transaction could not go forward without EXIM financing and therefore requires EXIM support—and a resolution, which underscores “the importance of ensuring that EXIM provides competitive financing to U.S. exporters while supplementing, not competing with, private capital.”

    CMS Issues Guidance to Ensure States Have a Plan in Place to Safely Reopen Nursing Homes: On Monday, the Centers for Medicare & Medicaid Services (CMS) announced new guidance for state and local officials to ensure the safe reopening of nursing homes across the country. It details critical steps nursing homes and communities should take prior to relaxing restrictions implemented to prevent the spread of COVID-19, including rigorous infection prevention and control, adequate testing, and surveillance. CMS included a recommendation that nursing homes remain in the current state of highest restriction even when a community begins to relax restrictions for other businesses and should be among the last to reopen within the community, to ensure safety of the residents.

    COMINGS AND GOINGS AT THE AGENCIES

    Comptroller of the Currency Joseph Otting to Step Down: On Thursday, Comptroller of the Currency Joseph Otting announced he will step down from office on May 29, 2020, after completing his overhaul of the Community Reinvestment Act. First Deputy and Chief Operating Officer Brian Brooks will become Acting Comptroller of the Currency. Mr. Brooks joined the OCC in 2018 following stints at Coinbase and Fannie Mae.

    Linda Miller Named as Deputy Executive Director of the Pandemic Response Accountability Committee: On Tuesday, the Pandemic Response Accountability Committee announced that Linda Miller had been appointed Deputy Executive Director. Ms. Miller previously worked at the Government Accountability Office.

    THE COURTS

    Securities Group Sues SEC over Consolidated Audit Trail Data Collection: On Monday, the American Securities Association filed suit against the SEC in a bid to block the collection of personal information as part of the Consolidated Audit Trail trading database. In a statement, ASA CEO Chris Iacovella said, “The ASA supported the creation of the CAT to surveil the markets, but as we have said repeatedly, this can be accomplished without collecting the personal information of every mom and pop American investor and storing it in a one stop shop for cybercriminals who want to steal their identities.”

    OTHER NOTEWORTHY ITEMS

    State AGs Call on Congress to Include Pot Banking Reforms in Relief Measures: A bipartisan group of 34 state attorneys general, led by Colorado Attorney General Phil Weiser and North Dakota Attorney General Wayne Stenehjem, wrote to Congress urging them to include protections for banks serving marijuana operations. They argued that “the current predicament of a rapidly expanding national marketplace without access to the national banking systems has resulted in an untenable situation,” adding, “the ability to efficiently collect tax revenue from the marijuana industry, estimated to have generated $15 billion in sales in 2019, will provide critical relief for state and local governments predicting budget shortfalls due to the pandemic.”

  • Daily Financial Regulation Update - Tuesday, May 26, 2020

    by
    FedACTion Task Force
    | May 26, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    SBA Releases Two More Interim Final Rules Providing Guidance on Loan Forgiveness and the SBA Loan Review Process

    May 22, 2020

    The Small Business Administration (SBA) issued two more Interim Final Rules. The first Interim Final Rule provides borrowers and lenders additional guidance on requirements governing the forgiveness of Paycheck Protection Program (PPP) loans. Under the first Interim Final Rule, banks are required to issue decisions on borrowers’ PPP loan forgiveness applications within 60 days after receiving them. The SBA will then pay the lender within 90 days. The second Interim Final Rule provides guidance with respect to the SBA loan review process and describes borrower and lender responsibilities in connection therewith. The SBA says in the second Interim Final Rule that it has the right to review any PPP loan at any time. According to the SBA, it is preparing a separate rule to establish an appeals process for borrowers determined to be ineligible for a PPP loan or ineligible for the PPP loan amount or the loan forgiveness amount claimed by the borrower. Finally, the two Interim Final Rules do not extend the amount of time borrowers have to use PPP loan proceeds beyond the current eight-week period and do not eliminate or reduce the 75% payroll rule.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    State Agencies

    New York State Department of Financial Services

    York State Health Insurers Must Cover Covid-19 Infection and Antibody Tests Administered By Pharmacists Without Cost-Sharing

    May 22, 2020

    The New York State Department of Financial Services (DFS) issued a circular letter stating New York State health insurers must provide coverage of coronavirus (COVID-19) infection and antibody tests ordered and provided by a pharmacist without cost-sharing. The letter reminds health insurers that diagnostic testing, including laboratory tests, is an essential health benefit, and, therefore, must be covered under individual and small group comprehensive health insurance policies and contracts. New York Insurance Laws also require health insurers of large group comprehensive health insurance policies and contracts to make available coverage for laboratory tests, and such tests are typically covered in the base policy or contract.

    International

    European Banking Authority

    COVID-19 is placing unprecedented challenges on EU banks

    May 25, 2020

    The European Banking Authority (EBA) published a preliminary assessment of the impact of COVID-19 on the EU banking sector. According to the note, the capital accumulated by banks since the global financial crisis together with capital relief initiatives provided by regulators amounts on average to 5 percentage points above banks’ overall capital requirements. According to the note, this capital buffer should allow many banks to absorb potential credit risk losses derived from a sensitivity analysis based on the 2018 stress test.

  • Daily Financial Regulation Update - Saturday, May 23, 2020

    by
    FedACTion Task Force
    | May 22, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Banking, Housing, and Urban Affairs

    Senators Brown, Grassley, Wyden and Scott Introduce Bipartisan Bill to Prevent Garnishment of CARES Act Relief Payments

    May 22, 2020

    U.S. Senator Sherrod Brown (D-OH), ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Senate Finance Committee Chairman Chuck Grassley (R-IA), Finance Committee Ranking Member Ron Wyden (D-OR) and Senator Tim Scott (R-SC) introduced a bill to protect recovery payments provided in the CARES Act from garnishment by private debt collectors.

    U.S. House of Representatives

    Committee on Financial Services

    Committee to Hold Bipartisan Virtual Roundtable on Impact of COVID-19 on Housing Markets

    May 22, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced that on May 22, 2020, Housing, Community Development, and Insurance Subcommittee Chairman Wm. Lacy Clay (D-MO) and Ranking Member Steve Stivers (R-OH) will host a virtual roundtable entitled, “Reviewing the Impact of the COVID-19 Pandemic on U.S. Housing Markets.”

    Committee on Small Business

    Crow Hosts Forum Examining the Issues Facing Small Business Insurance Policyholders Related to COVID-19

    May 21, 2020

    The House Small Business Subcommittee on Innovation and Workforce Development, under Chairman Jason Crow (D-CO), held a virtual forum on May 21, 2020 focused on the issues facing small businesses trying to make business interruption insurance claims related to COVID-19. 

    Federal Agencies

    Federal Reserve Bank of New York

    Risk Preferences at the Time of COVID-19: An Experiment with Professional Traders and Students

    May 22, 2020

    The Federal Reserve Bank of New York has released a staff report focusing on whether the COVID-19 pandemic has had an impact on risk preferences. The report finds that the shock to social and economic life due to the COVID-19 pandemic has not significantly affected risk preferences, both for a sample of professional traders and for one of students. They note that the stability of risk preferences after arguably the biggest shock to developed economies since World War II suggests that preferences for risk are a stable characteristic of individual behavior.

    Consumer Financial Protection Bureau

    CFPB Takes Action to Help Struggling Homeowners Seeking Mitigation Efforts; Consumers Seeking Small-Dollar Loans

    May 22, 2020

    The Consumer Financial Protection Bureau (CFPB) announced that it issued two No-Action Letter (NAL) Templates under its innovation policies. To encourage innovation, last year the CFPB introduced an improved NAL Policy that includes, among other things, a more streamlined review process focusing on the consumer benefits and risks of the applicant’s product or service. NALs provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. Using the first NAL template approved on May 22, 2020, mortgage servicers seeking to assist struggling borrowers to avoid foreclosure and engage in loss mitigation efforts would be able to apply for their own NAL. The CFPB also approved a NAL template that insured depository institutions can use to apply for a NAL covering their small-dollar credit products.

    Conference of State Bank Supervisors

    Financial Supervision During A Pandemic

    May 20, 2020

    Kevin Hagler, Chairman of the Conference of State Bank Supervisors (CSBS) and Commissioner of the Georgia Department of Banking and Finance, gave remarks on financial supervision during a pandemic at the CSBS State-Federal Supervisory Forum on May 20, 2020.

    Securities and Exchange Commission

    SEC Announces Virtual Conference on Municipal Securities Disclosure

    May 22, 2020

    The Securities and Exchange Commission announced that it has rescheduled its conference entitled “Spotlight on Transparency: A Discussion of Secondary Market Municipal Securities Disclosure Practices” for June 16, 2020.

    Commodity Futures Trading Commission

    CFTC Issues COVID-19 Customer Advisory on Commodity Exchange-Traded Products and Funds

    May 22, 2020

    The Commodity Futures Trading Commission (CFTC) issued a Customer Advisory informing the public about the unique risks associated with certain trading vehicles that use futures contracts or other commodity interests as they make investment decisions during the COVID-19 pandemic.

    CFTC to Hold an Open Commission Meeting on May 28, 2020

    May 21, 2020

    Commodity Futures Trading Commission (CFTC) Chairman Heath P. Tarbert announced that the CFTC will hold an open meeting via conference call on May 28, 2020 at 10:00 a.m., Eastern time.

    Department of Labor

    Department of Labor Report Shows Unemployment Jumped in all 50 States to Dramatically Differing Degrees

    May 22, 2020

    The Department of Labor issued a report confirming all 50 states reported higher unemployment rates in April, but demonstrating how results were dramatically different around the country.

    International

    Bank of England

    Update on the Contingent Term Repo Facility – Market Notice on May 22, 2020

    May 22, 2020

    The Bank of England announced that, in light of more stable funding market conditions and recent usage patterns, it will discontinue three-month Contingent Term Repo Facility operations at the end of May 2020. The final operation is scheduled to take place on May 28, 2020.

    Life beyond Solvency II: A View from the Top of the Regulator

    May 22, 2020

    Charlotte Gerken, Executive Director of Insurance Supervision at the Bank of England, gave remarks at the Association of British Insurers Prudential Regulation webinar, on how the insurance industry has responded to the COVID-19 crisis, including how elements of the Solvency II regime have behaved in recent conditions.

    Prudential Regulation Authority

    Statement by the PRA on Guidance on the Application of Regulatory Capital and IFRS 9 Requirements to Payment Holidays Granted or Extended to Address COVID-19

    May 22, 2020

    The Prudential Regulation Authority has issued a statement that provides further information on the application of regulatory capital and IFRS 9 requirements to payment holidays granted or extended to address the challenges of COVID-19.

    UK Financial Conduct Authority

    FCA Acts to Strengthen Protections for Customers using Payment Firms

    May 22, 2020

    The Financial Conduct Authority (FCA) has launched a consultation on additional guidance for payments firms to strengthen the way in which they look after customers’ funds. The guidance is part of a broader program to set out its expectations for the payments sector.

    FCA Announces Support for Customers who are Struggling to Pay their Mortgage due to Coronavirus

    May 22, 2020

    The Financial Conduct Authority (FCA) has announced proposals which will continue support for customers who are struggling to pay their mortgage due to the COVID-19 pandemic. The proposals outline the options firms will be required to provide customers coming to an end of a payment holiday, as well as those who are yet to request one. For customers yet to request a payment holiday, the time to apply would be extended until October 1, 2020. For those who are still experiencing temporary payment difficulties due to COVID-19, firms should continue to offer support, which could include extending a payment holiday by a three additional months.

  • Daily Financial Regulation Update - Friday, May 22, 2020

    by
    FedACTion Task Force
    | May 21, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    May 21, 2020

    Federal Reserve Bank of Boston to Hold Main Street Lending Program Drop-in Sessions starting on May 22, 2020

    The Federal Reserve Bank of Boston is offering drop-in sessions to learn about the Main Street Lending Programs:

    SBA Releases Interim Final Rule Providing for a Second Extension of Limited Safe Harbor with Respect to Certification Concerning Need for PPP Loan and Extending the Deadline for Lender Reporting

    May 20, 2020

    The Small Business Administration (SBA) issued another Interim Final Rule that revises an Interim Final Rule released on May 8, 2020 (May 8 Rule), by extending once again the date by which certain Paycheck Protection Program (PPP) borrowers may repay their loans to May 18, 2020, in order to avail themselves of a safe harbor with respect to the certification required by the CARES Act (“that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing obligations” of the applicant). The new Interim Final Rule also revises the May 8 Rule by extending the timeframe for submission of the initial SBA Form 1502 report for PPP loans, such that lenders must electronically upload SBA Form 1502 reporting information by the later of: (i) May 29, 2020 or (ii) 10 calendar days after disbursement or cancellation of a PPP loan.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Small Business and Entrepreneurship

    Chairman Rubio Joins Bipartisan Bill to Prevent Flagship 7(a) SBA Small Business Loan Program From Shutting Down

    May 21, 2020

    U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, joined Senators Tammy Duckworth (D-IL), Chris Coons (D-DE), and James Risch (R-ID) in introducing the Small Business Lending Continuity Act of 2020 to prevent the Small Business Administration’s (SBA) flagship Section 7(a) loan program from shutting down. The bill would fix an error in the CARES Actthat inadvertently results in the SBA’s flagship 7(a) Loan Guarantee Program shutting down whenever the Paycheck Protection Program (PPP) runs out of funding. If left uncorrected, the SBA’s 7(a) Loan Guarantee Program’s Fiscal Year 2020 $30 billion authorization cap would be void until July 1, 2020. The Section 7(a) loan program runs the risk of shutting down if PPP distributes its authorized revised cap of $310 billion. The bill passed the Senate by unanimous consent on May 20, 2020 and now goes to the House of Representatives for consideration. 

    Federal Agencies

    Federal Reserve Board

    Fed Listens: How is COVID-19 Affecting Your Community?

    May 21, 2020

    The Board of Governors of the Federal Reserve System (Board) hosted a Fed Listens event in a virtual format as part of its ongoing review of monetary policy strategy, tools, and communication practices. In light of the rapidly changing public health and economic environments, the Board convened the event to follow up with leaders from a range of organizations, including unions, small businesses, low- and moderate-income communities, retirees, and others, regarding how COVID-19 is affecting communities across the country.

    U.S. Economic Outlook and Monetary Policy

    May 21, 2020

    Richard H. Clarida, Vice Chair of the Board of Governors of the Federal Reserve System (Board), gave a webcast speech at the New York Association for Business Economics, on the current economic situation and outlook in light of COVID-19, and the Board’s response to the COVID-19 pandemic.

    Federal Reserve Bank of New York

    Too Important to Fail: Minority-Owned Businesses Navigating COVID-19 and Beyond

    May 21, 2020

    On May 27, 2020, the Federal Reserve Bank of New York (FRBNY) will host a virtual forum on the COVID-19 pandemic’s impact on small businesses and how community stakeholders and capital providers can support such firms. The event is the second installment of the FRBNY’s Fed and Main Street series. The event is open to the public.

    The Economy in the Time of Coronavirus

    May 21, 2020

    John C. Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, gave videoconference remarks at the Buffalo Niagara Partnership, the Greater Rochester Chamber of Commerce, and CenterState CEO on the economy in the time of coronavirus.

    What Do Financial Conditions Tell Us about Risks to GDP Growth?

    May 21, 2020

    The Federal Reserve Bank of New York released findings on what financial conditions indicate about risks to GDP group. Results of the findings highlight that although there are significant differences between the economic fallout from the COVID-19 pandemic and the global financial crisis in 2008—one originating from the real economy and the other originating from the financial sector—there are important similarities, with implications for the economic recovery.

    Securities and Exchange Commission

    SEC Issues Agenda for Upcoming Meeting of the Asset Management Advisory Committee

    May 21, 2020

    The Securities and Exchange Commission released the agenda for the May 27, 2020 meeting of the Asset Management Advisory Committee (AMAC). The meeting will include a discussion of matters relating to AMAC’s subcommittees and to COVID-19 and the asset management industry. The remote meeting is open to the public and will be webcast on SEC.gov.

    Consumer Financial Protection Bureau

    Consumer Financial Protection Bureau Issues Consumer Complaint Bulletin

    May 21, 2020

    The Consumer Financial Protection Bureau (CFPB) issued a report analyzing the complaints received during the COVID-19 pandemic. The report shows that mortgage and credit card complaints top the list of complaints the CFPB has received that mention coronavirus or related terms. In April and May 2020, the CFPB received historically higher complaints; however, complaints mentioning COVID-related terms amounted to a total of 4,500 complaints during those two months.

    Department of Labor

    Unemployment Insurance Weekly Claims During COVID-19

    May 21, 2020

    In a News Release regarding unemployment insurance weekly claims, the U.S. Department of Labor reported that in the week ending May 16, 2020, the advance figure for seasonally adjusted initial claims was 2,438,000, a decrease of 249,000 from the previous week’s revised level; the previous week’s level was revised down by 294,000, from 2,981,000 to 2,687,000; the four-week moving average was 3,042,000, a decrease of 501,000 from the previous week’s revised average; and, the previous week’s average was revised down by 73,500, from 3,616,500 to 3,543,000.

    International

    Bank of England

    How the BoE is Monitoring the Economy during the Covid-19 Pandemic

    May 21, 2020

    The Bank of England (BoE) released a post describing how it is monitoring the economy during the COVID-19 pandemic. The BoE has been using a wider range of indicators than usual to help monitor the economy recently, including timely data on spending, travel and internet searches. Those indicators point to a very sharp reduction in economic activity since March 2020.

  • Daily Financial Regulation Update - Thursday, May 21, 2020

    by
    FedACTion Task Force
    | May 21, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Treasury and SBA Update Paycheck Protection Program FAQs Regarding the Deadline for Submission of the Initial SBA Form 1502

    May 19, 2020

    The U.S. Department of the Treasury and Small Business Administration (SBA) updated their guidance on the Paycheck Protection Program (PPP) to confirm the SBA is extending the deadline for lenders to electronically submit the initial SBA Form 1502 reporting information to the later of: (i) May 29, 2020 or (ii) 10 calendar days after disbursement or cancellation of the PPP loan. Previously, the deadline was May 22, 2020 (FAQ 48).

    Federal Agencies Share Principles for Offering Responsible Small-Dollar Loans

    May 20, 2020

    The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration and Office of the Comptroller of the Currency issued principles for offering small-dollar loans in a responsible manner to meet customers’ short-term credit needs for both consumer and small business purposes.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    Federal Agencies

    Board of Governors of the Federal Reserve System

    Fed Minutes Released

    May 20, 2020

    The Board of Governors of the Federal Reserve System and the Federal Open Market Committee (FOMC) released the minutes of the April 28-29, 2020 meeting of the FOMC.

    Federal Reserve Bank of New York

    New York Fed Announces the First Subscription Date of June 17 for the Term Asset-Backed Securities Loan Facility and Releases Additional Information

    May 20, 2020

    The Federal Reserve Bank of New York announced the first loan subscription date for the Term Asset-Backed Securities Loan Facility (TALF) and released an expanded set of Frequently Asked Questions and other documents pertaining to the TALF’s operations. The TALF’s first subscription date for loans backed by eligible asset-backed securities will be June 17, 2020, and the first loan closing date will be June 25, 2020.

    Federal Reserve Bank of Boston

    Impact of the COVID-19 Pandemic on New England Homeowners and Renters

    May 20, 2020

    The Federal Reserve Bank of Boston’s New England Public Policy Center issued a regional brief on the impact of the COVID-19 pandemic on New England homeowners and renters. The report’s findings represent the immediate, three- to four-month impact that the COVID-19 outbreak and resulting legislation are likely having on New England households.

    Securities and Exchange Commission

    SEC Announces 2020 Small Business Forum, to be Held Virtually

    May 20, 2020

    The Securities and Exchange Commission will host its 39th annual Government-Business Forum on Small Business Capital Formation on the afternoon of June 18, 2020. This year the Forum will be a virtual event that will highlight challenges faced by small businesses in the current environment and success stories from startups to small cap businesses across the country.

    Department of Labor

    U.S. Department of Labor Announces Final Rule to Expand Access to Bonuses for American Workers

    May 20, 2020

    The U.S. Department of Labor’s (DOL) Wage and Hour Division announced a final rule that allows employers to offer bonuses or other incentive-based pay to employees whose hours vary from week to week. The rule clarifies that bonuses, premium payments, commissions and hazard pay on top of fixed salaries are compatible with the fluctuating workweek method of compensation, and that employers must include supplemental payments when calculating the regular rate of pay as appropriate under the Fair Labor Standards Act. The DOL believes the final rule will allow employers and employees to better utilize flexible work schedules, which will be critical as workers return to work during the ongoing COVID-19 pandemic.

    International

    European Commission

    Coronavirus Global Response: EU Allocates Additional €50 Million in Humanitarian Aid

    May 20, 2020

    The European Commission announced an additional €50 million in humanitarian aid to help respond to the dramatic increase in humanitarian needs caused by the coronavirus pandemic.

    European Semester Spring Package: Recommendations for a Coordinated Response to the Coronavirus Pandemic

    May 20, 2020

    The European Commission has proposed country-specific recommendations providing economic policy guidance to all EU Member States in the context of the coronavirus pandemic, focused on the most urgent challenges brought about by the pandemic and on relaunching sustainable growth.

    European Banking Authority

    EBA publishes Report on Interlinkages between Recovery and Resolution Planning

    May 20, 2020

    The European Banking Authority published a report, which assesses the links between recovery and resolution planning under the Bank Recovery and Resolution Directive, with the aim of enhancing synergies between the two phases and ensuring consistency in their potential implementation.

    Bank of England

    Bank of England Monetary Policy Report: The Economic Impact of Coronavirus

    May 20, 2020

    The Treasury Committee held a hearing with individuals from the Bank of England to examine the economic impact of the coronavirus pandemic.

  • Daily Financial Regulation Update - Wednesday, May 20, 2020

    by
    FedACTion Task Force
    | May 20, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Committee on Banking, Housing, and Urban Affairs

    Senate Banking Committee Holds First Quarterly CARES Act Hearing

    May 19, 2020

    The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled “The Quarterly CARES Act Report to Congress,” at which Treasury Secretary Mnuchin and Federal Reserve Chairman Powell testified.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Banking, Housing, and Urban Affairs

    Warren Calls for Robust Fed Lending Program Certification Process and Penalties for Violations of Eligibility Criteria

    May 18, 2020

    U.S. Senator Elizabeth Warren (D-MA) sent letters to the Federal Reserve Bank of New York and Federal Reserve Bank of Boston regarding the certification process for the recipients of funds distributed through Federal Reserve emergency lending facilities authorized by the CARES Act. Such facilities include the Main Street Lending Program, Primary Market Corporate Credit Facility and Secondary Market Corporate Credit Facility.

    U.S. House of Representatives

    Committee on Financial Services

    Waters Presses for Emergency Lending Programs Not to Support Predatory Lenders

    May 18, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, sent a letter to Federal Reserve Chairman Powell and Treasury Secretary Mnuchin, confirming that loans offered by payday, installment or other lenders are not eligible to be pledged as collateral to the Term Asset-Backed Securities Loan Facility or any other Federal Reserve program or facility supported by Congress and approved by the U.S. Department of the Treasury.

    Federal Agencies

    Department of the Treasury

    Treasury Issues Press Release on Delivery of EIPs by Prepaid Debit Card

    May 18, 2020

    The U.S. Department of the Treasury and Internal Revenue Service announced they are sending nearly four million Economic Impact Payments by prepaid debit card, instead of by paper check.

    Consumer Financial Protection Bureau

    CFPB Releases Video on Delivery of EIPs by Prepaid Debit Card

    May 19, 2020

    The Consumer Financial Protection Bureau released a video to inform consumers that, beginning this week, they may receive their Economic Impact Payments on a prepaid debit card, instead of a paper check.

    CFPB Extends Comment Period for Supplemental NPRM on Time-Barred Debt

    May 19, 2020

    The Consumer Financial Protection Bureau (CFPB) announced that it will provide an additional 60 days for the public to comment on its Supplemental Notice of Proposed Rulemaking on time-barred debt disclosures. According to the CFPB, the extension is intended to provide interested parties with additional time to comment on the rulemaking, in light of the impact of the COVID-19 pandemic. The comment period was scheduled to close on June 5, 2020, but now will close on August 4, 2020.

    Federal Register Notice

    Federal Reserve Bank of Boston

    Boston Fed President Rosengren Delivers Remarks on Federal Reserve Actions

    May 19, 2020

    In remarks prepared for a webinar hosted by the New England Council, Federal Reserve Bank of Boston President Eric Rosengren cited the economic cost of the necessary response to COVID-19, stressed the need to minimize the length of unemployment spells and ensure solvent firms have necessary liquidity and discussed the Main Street Lending Program, which is expected to open in the coming weeks.

    Federal Deposit Insurance Corporation

    FDIC Issues Consumer News Release on EDIE

    May 18, 2020

    The Federal Deposit Insurance Corporation provided information on its Electronic Deposit Insurance Estimator (EDIE). EDIE is an online tool that allows individuals to determine whether their accounts are fully insured at each bank where their deposits are held and to input dollar amounts on deposit in a bank, or use a hypothetical scenario, to determine deposit insurance coverage.

    Commodity Futures Trading Commission

    CFTC Commissioners Stump and Quintenz Deliver Statements before GMAC Meeting

    May 19, 2020

    Commodity Futures Trading Commission (CFTC) Commissioners Dawn Stump and Brian Quintenz both delivered statements before the first Global Markets Advisory Committee meeting of 2020.

    Financial Crimes Enforcement Network

    FinCEN Issues Advisory on COVID-19-Related Medical Scams

    May 18, 2020

    The Financial Crimes Enforcement Network (FinCEN) issued an advisory to alert financial institutions to emerging medical scams related to the COVID-19 pandemic. This advisory contains red flags, descriptions of COVID-19-related medical scams, and information on reporting suspicious activity. According to FinCEN, the advisory is the first of several it intends to issue on COVID-19-related financial crimes. FinCEN also issued a companion notice that provides detailed filing instructions for financial institutions.

    Federal Housing Finance Agency

    FHFA Announces Refinance and Home Purchase Eligibility for Borrowers in Forbearance

    May 19, 2020

    The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac have issued temporary guidance regarding the loan eligibility of borrowers who are in forbearance or have recently ended their forbearance. According to the FHFA, under the new guidance, borrowers are eligible to refinance or buy a new home if they are current on their mortgage or if, three months after their forbearance has ended, borrowers have made three consecutive payments under their repayment plan, or payment deferral option or loan modification.

    Department of Labor

    Department of Labor Releases Updated Fraud Prevention Resources

    May 19, 2020

    The U.S. Department of Labor released updated resources designed to help employers, employees and states prevent fraud or misuse in the unemployment insurance system, including the new unemployment insurance programs under the CARES Act. The updated resources include a list of all state unemployment insurance fraud hotlines, and a list of FAQs.

    Occupational Safety and Health Administration

    Department of Labor Adopts Revised Enforcement Policies for COVID-19.

    May 19, 2020

    The Department of Labor’s Occupational Safety and Health Administration (OSHA) adopted revised policies for enforcing OSHA’s requirements with respect to COVID-19. According to OSHA, the revised policies include an increase in in-person inspections at all types of workplaces, and a revision to OSHA’s previous enforcement policy for recording cases of COVID-19.

    International

    Bank of England

    HM Treasury Announces Update to CCFF

    May 19, 2020

    HM Treasury published details of an update to the terms of the Covid Corporate Financing Facility (CCFF). According to the Bank of England (Bank), the CCFF has supported £18.8 billion of lending to 55 businesses, and authorized a further £38.8 billion of potential lending, including to another 68 businesses that make a significant contribution to the economy of the United Kingdom. Further according to the Bank, the CCFF will continue to allow businesses that can demonstrate that they were in sound financial health as of March 1, 2020 to borrow from the Bank by issuing short-term commercial paper.

    Bank Issues CMN Regarding Joint HM Treasury and Bank CCFF

    May 19, 2020

    The Bank of England (Bank) issued a Consolidated Market Notice (CMN) describing the Bank’s and HM Treasury’s operation of the Covid Corporate Financing Facility (CCFF). The CMN updates the currently effective provisions of previous Market Notices in relation to the CCFF, and replaces all previous Market Notices relevant to the facility.

    UK Financial Conduct Authority

    FCA Announces Expiration and Termination of Various Short Selling Bans

    May 19, 2020

    The UK Financial Conduct Authority (FCA) issued an alert regarding the termination of short selling bans by the Austrian FMA, Belgium FSMA, French AMF, Greek HCMC, and Spanish CNMV, and the termination of a short selling ban by the Italian CONSOB.

  • Daily Financial Regulation Update - Tuesday, May 19, 2020

    by
    FedACTion Task Force
    | May 19, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    SBA Issues Interim Final Rule on Treatment of Entities with Foreign Affiliates

    May 18, 2020

    The Small Business Administration (SBA) issued an Interim Final Rule that supplements previously posted Interim Final Rules by providing guidance on additional eligibility requirements related to entities with foreign affiliates. The Interim Final Rule clarifies that employees of foreign affiliates are counted for purposes of determining whether a Paycheck Protection Program (PPP) borrower has more than 500 employees, except in limited circumstances where the affiliation rules expressly do not apply to the entity. Under the Interim Final Rule, the SBA will not find any borrower that applied for a PPP loan prior to May 5, 2020 to be ineligible based on the borrower’s exclusion of non-U.S. employees from its calculation of its employee headcount, if the borrower (together with its affiliates) had no more than 500 employees whose principal place of residence is in the U.S., based upon an exercise of the SBA’s enforcement discretion given that a reasonable borrower could have been confused based upon prior SBA guidance that was later resolved through a clarifying FAQ (FAQ 44) on May 5, 2020.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. Senate

    Committee on Banking, Housing, and Urban Affairs

    Senate Banking, Housing, and Urban Affairs Committee to Hold Quarterly CARES Act Hearing

    May 18, 2020

    The Committee on Banking, Housing, and Urban Affairs will meet remotely to conduct a hearing entitled “The Quarterly CARES Act Report to Congress” on May 19, 2020, at 10:00 a.m., Eastern. The witnesses will be: Steven T. Mnuchin, Secretary of the U.S. Department of the Treasury, and Jerome H. Powell, Chairman of the Board of Governors of the Federal Reserve System.

    Federal Agencies

    Federal Reserve Bank of New York

    New York Fed Releases Application Materials for the Municipal Liquidity Facility

    May 18, 2020

    The Federal Reserve Bank of New York released a sample application and form documents and certifications with detailed information for potential issuers who wish to sell eligible notes to the Municipal Liquidity Facility.

    Department of Housing and Urban Development/Federal Housing Administration

    HUD Allocates more than $75 Million in Fourth Wave of CARES Act Funding to Assist People Living with Disabilities

    May 18, 2020

    U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson announced nearly $77 million in a fourth wave of CARES Act funding, supporting up to 8,300 additional vouchers. This wave of relief funds is provided through HUD's Section 811 Mainstream Housing Choice Voucher Program and will provide affordable housing to non-elderly people living with disabilities. The program helps to further the goals of the Americans with Disabilities Act by helping persons with disabilities live in community-based settings.

  • This Week in Washington for May 18, 2020

    by
    Dina Ellis
    | May 18, 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 topped 1.5 million across the country as the death toll neared 90,000. Despite these statistics, the trend lines in some areas are beginning to show an encouraging drop in infections, and many states and localities have begun easing restrictions and reopening certain businesses as the public grows weary of social distancing measures. Despite the push to reopen, public health officials continued to express concern that various benchmarks have not yet been met, and that reopening too early without a clear plan to manage infections could lead to a second spike. In a hearing, HHS whistleblower Rick Bright warned that “our window of opportunity is closing” for decisive and coordinated federal action, and predicted a difficult winter of resurgence. The CDC released several one-page “decision tree” documents as part of an effort to guide the reopening of schools, restaurants, businesses, and transit; though many criticized the charts as inadequate and argued that more detailed plans are needed. On Friday, President Trump announced the formation of a new public-private partnership to focus efforts on vaccine development, dubbed “Operation Warp Speed.”

    On Friday, the House voted 217-189 on largely party lines to pass the sprawling US$3T Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. The relief package includes US$1T for state and local governments, as well as additional direct cash payments to citizens, expanded unemployment insurance, boosts to SNAP and nutrition assistance, rental and homeowner assistance, and provides badly needed funds to shore up the postal service and transit agencies among a slew of other progressive priorities. House Speaker Nancy Pelosi argued that as the unemployment rate hits 14.7%, it’s time to “think big” in order to support a safe reopening of the economy while protecting frontline workers. The measure is likely dead on arrival in the Senate however, as Republicans have voiced their opposition to the measure, calling it aspirational and a “left wing wishlist” with Senate Majority Leader Mitch McConnell urging Congress to “hit pause” and gauge the success of prior bills before considering additional measures.

    The Small Business Administration continued to process and distribute Paycheck Protection Program funding. As of Friday, the SBA reported they had processed 2.75 million applications from 5,479 different lenders, approving US$194.8B in loans from the US$320B allocated in the second tranche of funding. At the end of the week, they released additional information on the loan forgiveness component, including the official application. Despite this, many companies are scrambling to return the money they had received by the Monday deadline after facing confusing and shifting guidance and the threat of audits over their requests. The SBA sought to reassure smaller businesses, saying that loans under US$2M would not face review.

    Other highlights of last week include:

    • Late Friday evening, the President gave notice that he planned to fire the State Department’s Inspector General, his third IG firing in recent months, prompting the launch of a probe by Democratic leadership.
    • The FBI served a search warrant on Sen. Richard Burr (R-NC), collecting his cellphone as part of an ongoing investigation into his sale of stocks at the outset of the pandemic. Burr has stepped aside from his role as Chair of the Senate Intelligence Committee until the inquiry is concluded.
    • Republican Mike Garcia emerged victorious in the special election to fill former Rep. Katie Hill’s seat in California’s 25th District.

    LAST WEEK ON THE HILL

    Bipartisan Group of Senators Urge Fed to Take Additional Measures to Ease Borrowing Costs for State and Local Governments: Senators Sherrod Brown (D-OH), Bob Menendez (D NJ) Thom Tillis (R-NC), and Lisa Murkowski (R-AK) wrote to Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell, asking them to consider additional measures to ease the borrowing costs for state and local governments fighting the COVID-19 pandemic. The Senators argued, “State and local governments are on the frontlines in the fight against COVID-19 . . . quickly deploying desperately-needed funds to hospitals, public health departments, nursing homes, water and power utilities, public transit, and other essential services,” and thus “the Treasury and Federal Reserve must also ensure sufficient access to medium- and long-term capital” for them.

    Senators Call on Administration to Ensure that Lenders are not Shorting Small Businesses on PPP Loans: On Wednesday, Sen. Sherrod Brown (D-OH), Sen. Bob Menendez (D-NJ), and Sen. Tina Smith (D-MN) sent a letter to Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza urging them to provide answers and clarity to small businesses regarding Paycheck Protection Program (PPP) loan amounts. The Senators cited recent press reports where small businesses that successfully navigated the PPP process were surprised to find that they received less funding than they applied for or expected. The Senators called for the Administration to investigate the claims and address their questions immediately to ensure that all small businesses have access to full funding of PPP loans.

    Senators Jones Calls for Investigation into Potential Improper Political Influence on Repeal of Federal Payday Lending Rule: On Wednesday, Sen. Doug Jones (D-AL) led a group of colleagues in calling on Federal Reserve Board Inspector General Mark Bialek to open an investigation into the CFPB’s rulemaking process that led to the repeal of the Payday Rule. “Recent press reports detail a CFPB rulemaking process that, if true, flagrantly violates the Administrative Procedure Act’s (APA) requirements—in which political appointees exerted improper influence, manipulated or misinterpreted economic research, and overruled career staff to support a predetermined outcome,” the Senators wrote, adding, “In light of these disturbing allegations, we ask that you investigate to determine whether the Bureau’s process for reconsidering and repealing the 2017 Payday Rule violated the APA or other federal laws and regulations.”

    HOUSE FINANCIAL SERVICES COMMITTEE

    Bipartisan “Virtual Roundtable” with Prudential Regulators: On Wednesday, the Consumer Protection and Financial Institutions Subcommittee held a virtual roundtable with prudential regulators.

    • Rodney Hood, Chairman, National Credit Union Administration
    • Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation
    • Joseph Otting, Comptroller, Office of the Comptroller of the Currency
    • Randal Quarles, Vice Chairman, Board of Governors of the Federal Reserve System

    SENATE BANKING COMMITTEE

    Hearing on “Oversight of Financial Regulators”: On Tuesday, the full Committee held a remote hearing to receive testimony from the Fed, OCC, FDIC, and NCUA on efforts, activities, objectives, and plans with respect to regulatory and supervisory activities of banks, credit unions, and other regulated entities. Panel members from both sides of the aisle questioned why the Fed’s highly anticipated Municipal Liquidity Facility was not yet up and running. Comptroller Otting told the panel that the agency planned to push forward with Community Reinvestment Act rulemaking, despite calls from community groups and lawmakers to delay the process due to the pandemic.

    • Randal Quarles, Vice Chairman for Supervision, Board of Governors of the Federal Reserve System
    • Joseph Otting, Comptroller, Office of the Comptroller of the Currency
    • Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation
    • Rodney Hood, Chairman, National Credit Union Administration

    Executive Session”: On Tuesday, the full Committee held an executive session to vote on the nomination of Brian Miller to be Special Inspector General for Pandemic Recovery (SIGPR), and Dana Wade to be Assistant Secretary, U.S. Department of Housing and Urban Development, ultimately advancing both for consideration by the full Senate.

    OTHER COMMITTEES

    Senate Judiciary Committee “Examining Liability During the COVID-19 Pandemic”: On Tuesday, the full Committee held a hearing to consider the liability issues that businesses and public institutions may face in the reopening process. Senators on both sides of the aisle agreed that federally issued workplace standards would need to precede any liability shield legislation. Law Professor David Vladeck argued that “we urgently need science-based COVID 19 enforceable guidelines from public health agencies. Those guidelines not only safeguard the public but, at the same time, they provide the standards of liability.” Committee Chairman Lindsey Graham (R-SC) acknowledged that “the sooner we can come up with a regulatory, OSHA-driven process to allow big, small, and intermediate businesses [guidance], the better off we'll be.”

    • Mr. Kevin Smartt, Chief Executive Officer Kwik Chek Convenience Stores
    • Mr. Anthony “Marc” Perrone, International President United Food and Commercial Workers International Union
    • Ms. Rebecca Dixon, Executive Director National Employment Law Project
    • Mr. Leroy Tyner, Jr., General Counsel Texas Christian University
    • Professor David Vladeck, A.B. Chettle Chair in Civil Procedure Georgetown University Law Center
    • Ms. Helen Hill, Chief Executive Officer Explore Charleston

    Select Subcommittee on the Coronavirus Crisis Hearing on “Briefing to Focus on Need for Comprehensive Testing, Tracing, and Targeted Containment Strategy”: On Wednesday, the Select Subcommittee on the Coronavirus Crisis Hearing held its first briefing with a bipartisan group of key experts on the requirements for safely reopening our nation during the coronavirus pandemic.

    • Dr. Scott Gottlieb, Former Commissioner, Food and Drug Administration, Resident Fellow, American Enterprise Institute
    • Dr. Mark McClellan, Former Commissioner, Food and Drug Administration, Former Administrator, Centers for Medicare and Medicaid Services, Founding Director, Duke Margolis Center for Health Policy, Duke University
    • Dr. Ashish Jha, Director, Harvard Global Health Institute, Harvard University
    • Dr. Tom Inglesby, Director, Center for Health Security, Johns Hopkins Bloomberg School of Public Health
    • Dr. Georges Benjamin, Executive Director, American Public Health Association

    ON THE FLOOR

    Senate Reauthorizes Intelligence Programs: On Thursday, the Senate voted 80-16 to reauthorize lapsed provisions of the USA Freedom Act, including the Foreign Intelligence Surveillance (FISA) Court, albeit with changes to strengthen protections for individuals. The changes mean the measure will be sent back to the House for another vote.

    House Adopts Temporary Rule Change to Allow Proxy Voting and Remote Committee Work: On Friday, the House voted 217-189 on largely party lines to pass H. Res 965, which would allow members the option to vote by proxy and perform committee work remotely. “I don't suggest these changes lightly, I still believe that we do our best work in person and side by side,” said Rules Committee Chairman Jim McGovern (D-MA), “But we must temporarily embrace technology during this unprecedented time.”

    LEGISLATION INTRODUCED AND PROPOSED

    H.R. 6806: Rep. Emanuel Cleaver (D-MO) introduced H.R. 6806, which would suspend certain requirements under the public housing and housing choice voucher programs during the COVID 19 emergency.

    H.R. 6815: Rep. Abby Finkenauer (D-IA) introduced H.R. 6815, which would amend the CARES Act to provide for notice of the eviction moratorium under such Act to be provided to tenants of dwelling units subject to such moratorium.

    H.R. 6817: Rep. Al Green (D-TX) introduced H.R. 6817, which would establish a payroll loan facility for small financial institutions affected by COVID-19.

    H.R. 6820: Rep. Denny Heck (D-WA) introduced H.R. 6820, which would provide emergency rental assistance under the Emergency Solutions Grants program of the Secretary of Housing and Urban Development in response to the public health emergency resulting from the coronavirus.

    H.R. 6823: Rep. Jared Huffman (D-CA) introduced H.R. 6823, which would expand the housing choice voucher program of the Department of Housing and Urban Development to provide temporary housing during the COVID-19 health crisis.

    H.R. 6827: Rep. Alexandria Ocasio-Cortez (D-NY) introduced H.R. 6827, which would amend the Coronavirus Economic Stabilization Act of 2020 to place certain requirements on corporations receiving Federal aid related to COVID-19.

    H.R. 6830: Rep. Dean Phillips (D-MN) introduced H.R. 6830, which would amend the Riegle Community Development and Regulatory Improvement Act of 1994 to establish minimum issuance amounts under the CDFI Bond Guarantee Program.

    H.R. 6831: Rep. Dean Phillips (D-MN) introduced H.R. 6831, which would amend the CARES Act to authorize the Congressional Oversight Commission to submit discretionary reports to Congress.

    H.R. 6832: Rep. Dean Phillips (D-MN) introduced H.R. 6832, which would amend the CARES Act to authorize appropriations to carry out the duties of the Special Inspector General for Pandemic Recovery.

    H.R. 6835: Rep. Katie Porter (D-CA) introduced H.R. 6835, which would require residential mortgage servicers receiving certain emergency relief under the CARES Act to provide reports on loan-level data.

    H.R. 6850: Rep. Greg Meeks (D-NY) introduced H.R. 6850, which would protect stimulus checks from garnishment and fees and from being used as an offset by a credit union or depository institution.

    H.R. 6851: Rep. Alexandria Ocasio-Cortez (D-NY) introduced H.R. 6851, which would require major corporations receiving Federal aid related to COVID-19 to make annual payments of equity to employees of the corporation while such aid is outstanding.

    H.R. 6852: Rep. Alexandria Ocasio-Cortez (D-NY) introduced H.R. 6852, which would prohibit the Secretary of the Treasury and the Board of Governors of the Federal Reserve System from waiving provisions related to COVID-19 emergency relief and taxpayer protections related to such relief.

    H.R. 6859: Rep. Nydia Velazquez (D-NY) introduced H.R. 6859, which would authorize supplemental appropriations for public housing operations and tenant-based rental assistance.

    H.R. 6863: Rep. Doug Collins (R-GA) introduced H.R. 6863, which would authorize the imposition of sanctions with respect to the People's Republic of China for its obstruction or failure to cooperate in investigations relating to the outbreak of COVID-19.

    H.R. 6867: Rep. Vicente Gonzalez (D-TX) introduced H.R. 6867, which would provide necessary flexibility under programs for federally assisted housing to respond to the COVID-19 pandemic.

    H.R. 6868: Rep. Al Green (D-TX) introduced H.R. 6868, which would amend the CARES Act to establish a Community Capital Investment Program.

    H.R. 6873: Rep. Katie Porter (D-CA) introduced H.R. 6873, which would authorize supplemental funding for supportive housing for the elderly.

    H.R. 6874: Rep. Katie Porter (D-CA) introduced H.R. 6874, which would require reporting on the Paycheck Protection Program of the Small Business Administration.

    S. 3683: Sen. Lindsey Graham (R-SC) introduced S. 3683, which would authorize the imposition of sanctions with respect to the People's Republic of China for its obstruction or failure to cooperate in investigations relating to the outbreak of COVID-19.

    THIS WEEK ON THE HILL

    Tuesday, May 19

    Senate Banking Committee Hearing on “The Quarterly CARES Act Report to Congress”: 10:00 AM via WebEx.

    THE REGULATORS

    Federal Reserve Publishes Updates to the Term Sheet for the Municipal Liquidity Facility: On Monday, the Federal Reserve Board published updates to the term sheet for the Municipal Liquidity Facility (MLF) to provide pricing and other information. The MLF will offer up to US$500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic.

    Federal Reserve Publishes Updates to the Term Sheet for the TALF and Announces Information to Be Disclosed Monthly for the TALF and the PPPLF: On Tuesday, the Federal Reserve Board announced additional information regarding borrower and collateral eligibility criteria for the Term Asset-Backed Securities Loan Facility (TALF). To help ensure that U.S. consumers and businesses remain able to access credit at affordable terms, TALF initially will make up to US$100 billion of loans available. The Board also outlined the information it will publicly disclose for the TALF and the Paycheck Protection Program Liquidity Facility (PPPLF) on a monthly basis including the name of each participant in both facilities; the amounts borrowed, interest rate charged, and value of pledged collateral; and the overall costs, revenues, and fees for each facility.

    Federal Reserve Board Issues Report on the Economic Well-Being of U.S. Households: On Thursday, the Federal Reserve Board published its latest Report on the Economic Well-Being of U.S. Households, finding that financial conditions changed dramatically for people who experienced job loss or reduced hours during March 2020 as the spread of COVID-19 intensified in the United States. In addition to monitoring how households were faring near the onset of the COVID-19 pandemic, the report also highlights continuing financial concerns for many households that predated the public health crisis. Some of these financial challenges include the 25%of non-retired adults who lack retirement savings, the 18% of adults with outstanding debt from medical treatments, and the 3% of people who do not own their home who experienced an eviction in 2018 or 2019.

    Regulators Temporarily Change the Supplementary Leverage Ratio: On Friday, the Federal Reserve Board, FDIC, and OCC announced temporary changes to their supplementary leverage ratio rule. The temporary modifications will provide flexibility to certain depository institutions to expand their balance sheets in order to provide credit to households and businesses in light of the challenges arising from the coronavirus response. If a depository institution does change its supplementary leverage ratio calculation, it will be required to request approval from its primary federal banking regulator before making capital distributions, such as paying dividends to its parent company, as long as the exclusion is in effect. The interim final rule permits depository institutions to choose to exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio.

    New York Fed Releases Notice of Interest for the Municipal Liquidity Facility: On Friday, the New York Federal Reserve Bank of New York released a Notice of Interest (NOI) for Eligible Issuers to express interest in selling notes to the special purpose vehicle (SPV) Municipal Liquidity Facility LLC. Filling out the notice of interest is the initial step for an Eligible Issuer to provide eligibility information to the SPV for review. The New York Fed also announced that the SPV, Municipal Liquidity Facility LLC, designated BLX Group LLC (BLX) as its administrative agent for the execution phase of the MLF. In serving as the administrative agent, BLX will receive notices of interest and applications from Eligible Issuers interested in selling notes to the SPV, review those notices and applications based on criteria established by the New York Fed, and will be available to respond to questions from Eligible Issuers.

    FDIC Issues Proposed Rulemaking to Mitigate the Deposit Insurance Assessment Effects of Participation in the Paycheck Protection Program and Related Programs: On Tuesday, the FDIC’s Board of Directors authorized publication of a notice of proposed rulemaking that would mitigate the deposit insurance assessment effects of participating in the Paycheck Protection Program (PPP) established by the Small Business Administration and the Paycheck Protection Program Lending Facility and Money Market Mutual Fund Liquidity Facility established by the Federal Reserve Board. To provide certainty to insured depository institutions regarding the assessment effects of participating in these programs, the FDIC is proposing an effective date by June 30, 2020 and an application date of April 1, 2020, which would ensure that the changes are applied to assessments starting in the second quarter of 2020.FDIC Issues Proposed Rulemaking to Mitigate the Deposit Insurance Assessment Effects of Participation in the Paycheck Protection Program and Related Programs: On Tuesday, the FDIC’s Board of Directors authorized publication of a notice of proposed rulemaking that would mitigate the deposit insurance assessment effects of participating in the Paycheck Protection Program (PPP) established by the Small Business Administration and the Paycheck Protection Program Lending Facility and Money Market Mutual Fund Liquidity Facility established by the Federal Reserve Board. To provide certainty to insured depository institutions regarding the assessment effects of participating in these programs, the FDIC is proposing an effective date by June 30, 2020 and an application date of April 1, 2020, which would ensure that the changes are applied to assessments starting in the second quarter of 2020.

    CFPB Issues Final Remittance Rule: On Monday, the CFPB issued a final rule covering remittances transfers. Among its requirements, the Rule mandates that remittance transfer providers generally must disclose the exact exchange rate, the amount of certain fees, and the amount expected to be delivered to the recipient. The Rule allows for depository institutions to estimate certain fees and exchange rate information under certain circumstances, but, by statute, this provision expires in July 2020. The Rule also increases the threshold that determines whether an entity that makes remittance transfers is subject to the Rule. Entities making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the Rule.

    CFPB, FHFA, & HUD Launch Joint Mortgage and Housing Assistance Website for Americans Impacted by COVID-19: On Tuesday, the CFPB, FHFA, and HUD launched a new mortgage and housing assistance website, https://www.cfpb.gov/housing, with the goal of ensuring homeowners and renters have the most up to date and accurate housing assistance information during the COVID-19 national emergency. This joint website consolidates the CARES Act mortgage relief, protections for renters, resources for additional help, and information on how to avoid COVID-19 related scams. It also provides lookup tools for homeowners to determine if their mortgage is federally backed, and for renters to find out if their rental unit is financed by FHA, Fannie Mae, or Freddie Mac.

    CFPB Outlines Responsibilities of Financial Firms During Pandemic: On Wednesday, the CFPB released a statement and FAQs outlining the responsibility of certain financial firms during the pandemic. In the statement, the Bureau outlines the billing error responsibilities of credit card issuers and other open-end non-home secured creditors during the COVID-19 pandemic. Additionally, the Bureau encourages financial firms to continue to provide the kind of assistance to their communities that many have been providing, such as waiving fees, lowering minimum-balance requirements, and implementing changes in account terms that benefit consumers.

    CFPB, CSBS Issue Consumer Guide on Mortgage Relief Options: On Friday, the CFPB and the Conference of State Bank Supervisors released a Consumer Relief Guide, which outlines borrowers’ rights to mortgage payment forbearance and foreclosure protection under the federal CARES Act.

    FHA Extends Foreclosure and Eviction Moratorium for Single Family Homeowners and Remote Work Flexibilities for Lenders and Appraisers: On Thursday, the Federal Housing Administration announced an extension of its foreclosure and eviction moratorium through June 30, 2020, for homeowners with FHA-insured Single Family mortgages, while also supporting new FHA insured mortgage originations through an extension of temporary policy flexibilities for lenders and appraisers. The FHA's moratorium extension applies to homeowners with FHA insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, and directs mortgage servicers to: (1) halt all new foreclosure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties; and (2) cease all evictions of persons from FHA-insured Single Family properties, excluding actions to evict occupants of legally vacant or abandoned properties.

    Freddie Mac Announces COVID-19 Payment Deferral: On Wednesday, Freddie Mac announced a solution for homeowners once they have resolved their COVID-19-related hardship that can quickly bring their mortgages current and put them back on track. The Freddie Mac COVID-19 Payment Deferral solution will return a homeowner’s monthly mortgage payment to its pre-COVID amount by adding up to 12 months of missed payments, including escrow advances, to the end of the mortgage term without accruing any additional interest or late fees. This will help borrowers keep their mortgage payment current following their hardship when other options—such as reinstatement, or a repayment plan—are not viable. The COVID-19 Payment Deferral solution is effective July 1, 2020, at which time Servicers must begin evaluating homeowners with resolved COVID-19 related hardships for eligibility.

    COMINGS AND GOINGS AT THE AGENCIES

    SEC Names John Moses Managing Executive in Chairman’s Office: On Monday, the SEC announced that John Moses has been named the Managing Executive in the Office of Chairman Jay Clayton. Mr. Moses was previously the Deputy Director in the SEC’s Office of Minority and Women Inclusion. Mr. Moses succeeds Peter Uhlmann, who will assume a new role in the agency’s Office of Compliance Inspections and Examinations.

    THE COURTS

    Fourth Circuit Allows Emoluments Challenge to Proceed: On Thursday, the Fourth Circuit voted 9-6 to reject the President’s effort to shut down a lawsuit brought by the governments of Maryland and the District of Columbia, which alleges that the President has violated the emoluments clause of the constitution. The President’s attorneys have indicated they will seek relief from the Supreme Court.

    OTHER NOTEWORTHY ITEMS

    FinCEN Director Addresses Blockchain Conference: On Wednesday, FinCEN Director Kenneth Blanco addressed the Consensus Blockchain Conference, which was held virtually. He discussed FinCEN’s efforts to provide guidance related to the COVID-19 pandemic; the Travel Rule and trends FinCEN is seeing with respect to compliance; and opportunities for collaboration in the fight against the illicit use of virtual currencies and key challenges.

    ***

  • Daily Financial Regulation Update - Monday, May 18, 2020

    by
    FedACTion Task Force
    | May 18, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Regulators Temporarily Change the Supplementary Leverage Ratio to Increase Banks’ Ability to Support Credit to Households and Businesses in Light of the Coronavirus Response

    May 15, 2020

    The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued an interim final rule temporarily changing the supplementary leverage ratio rule. The temporary modifications provide flexibility to certain depository institutions to expand their balance sheets in order to provide credit to households and businesses in light of the challenges arising from the coronavirus response.

    House Passes HEROES Act

    May 15, 2020

    The House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, H.R. 6800, in a 208-199 vote.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. House of Representatives

    Committee on Financial Services

    Waters Urges Congress to Pass HEROES Act

    May 15, 2020

    Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, gave a floor statement in support of the HEROES Act (H.R. 6800).

  • Daily Financial Regulation Update - Saturday, May 16, 2020

    by
    FedACTion Task Force
    | May 15, 2020

    Subscribe to PH FedACTion: Financial Regulatory Updates

    PH Client Alerts

    Click here to read more from our Coronavirus series.

    Major Developments

    Small Business Administration and Treasury Release PPP Loan Forgiveness Application

    The Small Business Administration (SBA) and U.S. Department of the Treasury (Treasury) released the Loan Forgiveness Application and Instructions for Borrowers. The Application and supporting materials including a PPP Loan Forgiveness Calculation Form and related certifications as to use of proceeds and confirmation that non-payroll costs in excess of 25% of the amount requested are not included, are to be submitted to the PPP Lender. The application notes that a false statement to obtain forgiveness of an SBA-guaranteed loan is punishable under the law, including:

    1. 18 U.S.C. §§ 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000;
    2. 15 U.S.C. § 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and
    3. if submitted to a federally insured depository institution, under 18 U.S.C. § 1014, by imprisonment of not more than 30 years and/or a fine of not more than $1 million.

    New York Fed Releases Notice of Interest for the Municipal Liquidity Facility

    May 15, 2020

    The Federal Reserve Bank of New York (the New York Fed) released a Notice of Interest (NOI) for Eligible Issuers to express interest in selling notes to the special purpose vehicle (SPV) Municipal Liquidity Facility LLC. Eligible Issuers include U.S. states, the District of Columbia, U.S. cities with a population over 250,000 residents, U.S. counties with a population over 500,000 residents and certain multi-state entities. Filling out the NOI is the initial step for an Eligible Issuer to provide eligibility information to the SPV for review.

    Congress

    Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.

    Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

    Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

    U.S. House of Representatives

    Committee on Financial Services

    Financial Services Committee Releases Fact Sheets on the Heroes Act

    May 15, 2020

    In anticipation of the U.S. House of Representatives’ vote on the Heroes Act (the Act), the House Financial Services Committee released a series of fact sheets that detail how the Act will support various parties impacted by the COVID-19 pandemic.

    Federal Agencies

    Federal Reserve Board

    Federal Reserve Board Releases Financial Stability Report

    May 15, 2020

    The Board of Governors of the Federal Reserve System (the Board) released a report summarizing its framework for assessing the resilience of the U.S. financial system and presenting the Board’s current assessment. The report concludes that the outlook for the COVID-19 pandemic is uncertain and there is potential for stresses to interact with preexisting vulnerabilities stemming from financial system or fiscal weaknesses in Europe, China and emerging market economies.

    Federal Reserve Board Releases Industrial Production and Capacity Utilization Report

    May 15, 2020

    In a report on industrial production and capacity utilization, the Board found that total industrial production fell 11.2 percent in April for its largest monthly drop in the 101-year history of the index, as the COVID-19 pandemic led many factories to slow or suspend operations throughout the month. Manufacturing output dropped 13.7%; its largest decline on record; the output of motor vehicles and parts fell more than 70%; and production elsewhere in manufacturing dropped 10.3%.

    Securities and Exchange Commission

    SEC Chairman Clayton Issues Remarks to the Financial Stability Oversight Council

    May 14, 2020

    In remarks to the Financial Stability Oversight Counsel, Chairman of the U.S. Securities and Exchange Commission (SEC) Jay Clayton reviewed the SEC’s primary responsibilities during the COVID-19 pandemic, including:

    1. Using its authority, expertise and experience to help ensure the continuing, orderly and fair function of the securities markets;
    2. Monitoring market prices and price movements, flows of capital and availability of credit to assess functionality and resiliency of the capital markets; and
    3. Monitoring and providing guidance concerning, and emphasizing, timely and accurate issuer and other disclosures.

    Consumer Financial Protection Bureau

    CFPB, CSBS Issue Consumer Guide on Mortgage Relief Options

    May 15, 2020

    To guide homeowners with federally backed loans through the process of obtaining mortgage relief, the Consumer Financial Protection Bureau (Bureau) and the Conference of State Bank Supervisors released a Consumer Relief Guide with borrowers’ rights to mortgage payment forbearance and foreclosure protection under the CARES Act.

    Ginnie Mae

    APM 20-06: Treatment of Mortgage Delinquency Ratios for Issuers Affected by COVID-19

    May 14, 2020

    Ginnie Mae issued All Participant Memorandum 20-06, which provides issuers temporary relief from the acceptable delinquency rate threshold requirement identified in Ch. 18, Part 3, § C of the Mortgage-Backed Securities (MBS) Guide (the Guide). Pooled mortgages for which no scheduled monthly payments were received due to forbearance are reported as delinquent within the context of MBS investor reporting guidelines. Under Chapter 18, Part 3, § D of the Guide, any issuer that fails to maintain delinquency rates below the applicable threshold levels described in Ch. 18, Part 3, § C, may be subjected to Ginnie Mae sanctions. Recognizing that a significant number of issuers may experience increasing delinquency rates as a result of extending forbearances to borrowers experiencing COVID-19-related hardships (as required under the CARES Act), Ginnie Mae will exclude any new issuer delinquencies occurring on or after April 2020 when calculating the delinquency ratios for the purposes of enforcing the provisions in Ch. 18, Part 3, §§ C & D of the Guide.

    International

    UK Financial Conduct Authority

    FCA Issues Statement on Business Interruption Insurance during the COVID-19 Crisis

    May 15, 2020

    The Financial Conduct Authority (FCA) issued a statement inviting policyholders and insurance intermediaries who are aware of unresolved disputes with insurers over the terms of business interruption (BI) insurance policies to engage with the FCA if they want their concerns to be taken into account as part of a test case the FCA intends to file in court. The statement is a follow-up to the FCA’s statement on May 1, 2020 in which it indicated its intention to obtain court declarations aimed at resolving contractual uncertainty in selected BI insurance policies. In particular, the FCA is inviting parties to put forward their arguments as to why they believe coverage should be available, together with details of policies that they consider have not responded appropriately to a claim, as well as brief relevant facts of their case.