ph fedaction financial regulatory updates homepage

Daily Financial Regulation Update - Friday, June 26, 2020

June 26, 2020

By FedACTion Task Force

Subscribe to

PH Client Alerts

to read more from our Coronavirus series.

Major Developments

GAO Releases Report on Initial Federal Response to COVID-19 Programs

June 25, 2020

The United States Government Accountability Office (GAO) issued a report (Report) entitled, “COVID-19 - Opportunities to Improve Federal Response and Recovery”. In the Report, the GAO examined the $2.6 trillion in emergency assistance for people, businesses, the health care system, and state and local governments appropriated by the U.S. Congress in response to the COVID-19 pandemic. The Report discusses that among other things the U.S. Small Business Administration processed over $512 billion in guaranteed small business loans, but currently is not ready to address fraud risks in the Program and has failed to address ongoing oversight of the loans. Moreover, the Report notes that, the Internal Revenue Service and U.S. Department of the Treasury made approximately 160.4 million payments valued at more than $269.3 billion to taxpayers as of May 31, 2020, which included payments to more than a million deceased individuals. The Report includes recommendations to address these and other issues.

Federal Reserve Board Releases 2020 Stress Tests Results, Additional Sensitivity Analyses

June 25, 2020

The Board of Governors of the Federal Reserve System (FRB) released the results of its stress tests for 2020, and additional sensitivity analyses conducted in light of the COVID-19 pandemic.

In addition to its normal stress test, the FRB conducted a sensitivity analysis to assess the resiliency of large banks under three hypothetical recessions, or downside scenarios, which could result from COVID-19. The scenarios included a V-shaped recession and recovery; a slower, U-shaped recession and recovery; and a W-shaped, double-dip recession.


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

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

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

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, Brown Call for Major Debt Collectors to Suspend Lawsuits, Wage Garnishment

June 25, 2020

U.S. Senators Elizabeth Warren (D-MA), member of the Senate Committee on Banking, Housing, and Urban Affairs (Committee), and Sherrod Brown (D-OH), Ranking Member of the Committee, sent letters to Capital One Financial Corporation, Encore Capital Group, PRA Group and Alorica Inc. following reports of predatory and aggressive debt collection practices by the industry in the midst of the economic collapse caused by the COVID-19 pandemic. In their letters, Senators Warren and Brown wrote that “[n]obody should lose their home, their car, their utilities, or access to basic needs during a global pandemic”, and that “[f]iling collection lawsuits and garnishing the wages of consumers already struggling to pay for basic necessities will only exacerbate the economic and public health crisis."

Federal Agencies

Federal Reserve Board

Agencies Finalize Swap Margin Rule Amendments

June 25, 2020

The U.S. Department of the Treasury, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Farm Credit Administration and Federal Housing Finance Agency finalized changes to their swap margin rule to facilitate the implementation of prudent risk management strategies at banks and other entities with significant swap activities.

Under the final rule, entities that are part of the same banking organization generally will no longer be required to hold a specific amount of initial margin for uncleared swaps with each other, known as inter-affiliate swaps. Inter-affiliate swaps typically are used for internal risk management purposes by transferring risk to a centralized risk management function within the firm. The final rule will give firms additional flexibility to allocate collateral internally and support prudent risk management and safety and soundness.

Federal Reserve Bank of New York

Federal Reserve Bank of New York Remarks on COVID-19 Response

June 25, 2020

Michael Held, Executive Vice President and General Counsel of the Federal Reserve Bank of New York, delivered remarks entitled, “The Federal Reserve’s Pandemic Response”, at a Union of Arab Banks Webinar.

Securities and Exchange Commission

Clayton Testifies on Capital Markets and Emergency Lending During COVID-19

June 25, 2020

Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, delivered testimony, entitled “Capital Markets and Emergency Lending in the COVID-19 Era”, before the House Committee on Financial Services’ Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.

SEC Releases Statements on Requirements for Certain Paper Documents

June 25, 2020

The staff of the U.S. Securities and Exchange Commission’s Division of Corporation Finance (CorpFin) released a statement (Statement) regarding requirements for certain paper documents (other than Forms 144) in light of concerns regarding the COVID-19 pandemic. The Statement, which is temporary but will remain in effect until further public notice, states that with regard to certain documents listed in the Statement, CorpFin staff “will not recommend enforcement action to the Commission if (the documents) are submitted via email in lieu of mailing or delivering the paper document to the SEC if the filer attaches a complete document, including any required exhibits, as PDF attachments to an email sent to CorporationFinancePaperForms@SEC.gov.”

Similarly CorpFin staff “will not recommend enforcement action to the Commission if Forms 144 filed in paper under Rules 101(b)(4) or 101(c)(6) of Regulation S-T are submitted via email in lieu of mailing or delivering the paper form to the SEC if the filer or submitter attaches a complete Form 144 as a PDF attachment to an email sent to PaperForms144@SEC.gov.”

Moreover, SEC staff “will not recommend the Commission take enforcement action with respect to the requirements of Rule 302(b) if: a signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b); such document indicates the date and time when the signature was executed; and the filer establishes and maintains policies and procedures governing this process.”

Department of Labor

Labor Department Issues News Release on Unemployment Insurance Weekly Claims

June 25, 2020

The U.S. Department of Labor (Labor Department) issued a News Release (Release) regarding weekly unemployment insurance claims. The Release states that, for the week ending June 20, 2020, the advance figure for seasonally-adjusted initial claims was 1,480,000, a decrease of 60,000 from the previous week's revised level; the previous week's level was revised up by 32,000 from 1,508,000 to 1,540,000; the four-week moving average was 1,620,750, a decrease of 160,750 from the previous week's revised average; and, the previous week's average was revised up by 8,000 from 1,773,500 to 1,781,500.

Department of Education

DeVos Issues Rule Regarding Use of CARES Act Funding

June 25, 2020

Betsy DeVos, Secretary of the U.S. Department of Education, issued an interim final rule (IFR) outlining how local education agencies (LEAs) must calculate the CARES Act emergency funds available for providing equitable services to students and teachers in private schools. Under the IFR, if an LEA chooses to use CARES Act funding for students in all its public schools, it still must calculate the funds for equitable services based on students enrolled in private schools in the district. However, if an LEA chooses to use CARES Act funding only for students in its Title I schools, it has two options: (i)calculate the funds for equitable services based on the total number of low-income students in Title I and participating private schools; or, (ii) calculate the funds using the LEA’s Title I, Part A share from the 2019-2020 school year.