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Advice for Businesses in Dealing with the Expanding Coronavirus Events

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Daily Financial Regulation Update -- Friday, August 7, 2020

By
FedACTion Task Force
On Aug 07, 2020

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Congress

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

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

Click here to view the full text of the Paycheck Protection Program Flexibility Act of 2020, Enacted June 5, 2020.

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

Federal Agencies

Federal Reserve Board

Federal Reserve Releases Periodic Report Updating Outstanding Lending Facilities

August 5, 2020

The Board of Governors of the Reserve System (Board) released a periodic report (Report) on the lending facilities established by the Board under Section 13(3) of the Federal Reserve Act, including the Main Street Lending Program (Program). According to the Report, demand for Program loans has been low. As of July 27, 2020, only eight Program loans (three Main Street New Loan Facility loans and five Main Street Priority Loan Facility loans) have been made, in a principal amount of $80.9 million with $76.855 million (95%) of participations having been purchased by the Main Street SPV.

Federal Reserve Announces Details of New 24x7x365 Interbank Settlement Service with Clearing Functionality to Support Instant Payments in the United States

August 6, 2020

The Board of Governors of the Federal Reserve System announced details of the FedNowSM Service, a proposed 24x7x365 interbank settlement service with clearing functionality to support instant payments in the United States. The Federal Reserve will take a phased approach to service implementation. The first release of the FedNowSM Service will provide core clearing and settlement features that will support market needs and help banks manage the transition to a 24x7x365 service. Additional features and service enhancements will be introduced over time. The target launch date for the service remains 2023 or 2024.

Governor Brainard Delivers Speech on the Future of Retail Payments in the United States

August 6, 2020

Governor Lael Brainard of the Board of Governors of the Federal Reserve System (the Federal Reserve) delivered a speech at the FedNowSM Service Webinar on the future of retail payments in the United States. The speech highlighted the urgency of immediate access to funds for households and businesses struggling during the COVID-19 pandemic and addressed the Federal Reserve’s progress in developing the FedNowSM Service to support instant payments.

Federal Reserve Bank of New York

New York Fed Report Shows Total Household Debt Decreased in Q2 2020, Marking First Decline Since 2014

August 6, 2020

The Federal Reserve Bank of New York’s (the New York Fed’s) Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt decreased by $34 billion (0.2%) to $14.27 trillion in the second quarter of 2020. This marks the first decline since the second quarter of 2014 and is the largest decline since the second quarter of 2013. The Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data. This latest report reflects consumer credit data as of June 30, 2020.

Blog Post on Reconsidering the Phase One Trade Deal with China in the Midst of the Pandemic

August 6, 2020

The Federal Reserve Bank of New York’s Liberty Street Economics blog released a blog post setting forth six key takeaways from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit.

Singh Delivers Speech on Recent Global Developments and Central Bank Responsibilities in a Changing Risk Landscape

August 5, 2020

Daleep Singh, Executive Vice President of the Federal Reserve Bank of New York, delivered remarks at the Official Sector Service Providers (OSSP)-Bank Negara Malaysia (BNM)-South East Asian Central Banks (SEACEN) Research and Training Centre Forum on Central Bank Foreign Currency Operations. In addition to highlighting risks facing central banks during the COVID-19 pandemic, such as the need for enabling infrastructure for safe digital payments, Singh addressed the special responsibilities of OSSP’s in the current environment, including the role of OSSPs in supporting global financial stability and the trust and confidence that the world's central banks place in OSSPs for their self-insurance and investment needs.

Federal Reserve Bank of Boston

Main Street Lending Program Nonprofit Organization FAQs updated

August 6, 2020

The Federal Reserve Bank of Boston updated the Main Street Lending Program’s Nonprofit Organization FAQs to provide guidance regarding the calculation of “total compensation” for purposes of complying with limits on compensation under the direct loan restrictions (FAQs H.12. and H.13.). In addition, there were minor modifications to provisions regarding options for funding loans under the Program (FAQ L.4.).

National Credit Union Association

NCUA Issues COVID-19 Fraud Schemes Alert

August 6, 2020

The National Credit Union Administration Board issued an alert to inform credit unions about the risk of fraud associated with the COVID-19 pandemic. The alert describes increased risks associated with routine operations, outlines red flags associated with common fraud schemes in major CARES Act programs, provides references and avenues to report fraud or misconduct to the most appropriate authorities and provides member education resources.

Federal Housing Finance Agency

FHFA Announces that Multifamily Property Owners in Forbearance are Now Required to Inform Tenants of Eviction Suspension and Tenant Protections

August 6, 2020

To increase awareness of available tenant protections, the Federal Housing Finance Agency (FHFA) announced that multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac who enter into a new or modified forbearance agreement must inform tenants in writing about tenant protections during the multifamily property owner's forbearance and repayment periods.

Department of Labor

DOL Releases Unemployment Insurance Weekly Claims Report Update

August 6, 2020

The U.S. Department of Labor released its weekly unemployment insurance claims report, which found that in the week ending August 1, the advance figure for seasonally adjusted initial claims was 1,186,000, a decrease of 249,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 1,434,000 to 1,435,000. The 4-week moving average was 1,337,750, a decrease of 31,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 1,368,500 to 1,368,750.

State Agencies

New York State Department of Financial Services

NEW YORK DFS SENDS LETTER TO FEDERAL GOVERNMENT ON BEHALF OF MULTI-STATE COALITION OF STUDENT LOAN ADVOCATES 

August 6, 2020

The New York State Department of Financial Services (DFS) sent a letter to U.S. Department of Education Secretary Betsy DeVos on behalf of a multi-state coalition of student loan advocates urging Secretary DeVos to take proactive steps to protect student loan borrowers. On September 30, 2020, relief for federal student loan borrowers under the CARES Act will end.

 

International

Bank of England

Bank of England Releases Monetary Policy Report and Financial Stability Report

August 6, 2020

The Bank of England (the Bank) released its Monetary Policy Report and Financial Stability Report for August 2020, highlighting measures the Bank has taken to address reduced jobs and incomes during the COVID-19 pandemic.. The Bank has set monetary policy to influence spending in the economy and to ensure inflation returns to its 2% target and has made UK banks and building societies increase the financial resources they have set aside to act as a shock absorber.

Bank of England Releases Financial Policy Summary and Record

August 6, 2020

The Financial Policy Committee (FPC) of the Bank of England released its Financial Policy Summary and Record for August 2020. In May, the FPC judged that banks had buffers of capital that were more than sufficient to absorb the cumulative losses under the illustrative economic scenario in the May Monetary Policy Report (MPR). As set out in the Monetary Policy Committee’s (MPC’s) central projection in the August MPR, economic output is expected to have fallen substantially, but the cumulative loss of output resulting from the pandemic is projected to be somewhat smaller than in the illustrative economic scenario in the May MPR. The FPC continues to judge that banks have buffers of capital more than sufficient to absorb the losses that are likely to arise under the MPC’s central projection.

MPC Maintains Bank Rate at 0.1%

August 6, 2020

At its most recent meeting, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to maintain the Bank Rate at 0.1%. The MPC voted unanimously for the Bank of England to continue with its existing programs of UK government bond and sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, maintaining the target for the total stock of these purchases at £745 billion.

Monthly Decision Maker Panel Releases Data from July 2020

August 6, 2020

The Bank of England’s July Decision Maker Panel survey, conducted between July 3 and 17, received 2,788 responses. Businesses estimated that their sales in 2020 Q2 were 30% lower than they would otherwise have been because of Covid-19, employment 5% lower and investment 33% lower.