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Advice for Businesses in Dealing with the Expanding Coronavirus Events

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Daily Financial Regulation Update - Friday, May 29, 2020

By
FedACTion Task Force
On May 29, 2020

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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.