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Daily Financial Regulation Update - Monday, April 6, 2020

April 06, 2020

By FedACTion Task Force

Major Developments

COVID-19: Federal Reserve will establish a facility to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program (PPP) by providing term financing backed by PPP loans

April 6, 2020

The Federal Reserve will establish a facility to provide term financing backed by loans originated under the Small Business Administration's Paycheck Protection Program (PPP). Details concerning this facility are expected to be announced this week.

Federal Reserve Bank of New York Opens the Registration Process for the Commercial Paper Funding Facility and Releases Additional Information for April 14 Launch

April 6, 2020

The Federal Reserve Bank of New York today opened the registration process for the Commercial Paper Funding Facility (CPFF) and released an expanded set of Frequently Asked Questions (FAQs) pertaining to the facility’s operations. The CPFF will begin funding purchases of commercial paper on April 14, 2020.

Congress

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

from the Senate Committee on Banking, Housing and Urban Development, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

Federal Bank Regulatory Agencies

COVID-19: Federal Bank Regulatory Agencies Announce Changes to the Community Bank Leverage Ratio

April 6, 2020

The Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency announced the issuance of two interim final rules implementing Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act, which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent. The two rules modify the community bank leverage ratio framework so that:

(a) beginning in the second quarter 2020 and until the end of the year, a banking organization that has a leverage ratio of 8 percent or greater and meets certain other criteria may elect to use the community bank leverage ratio framework; and

(b) community banking organizations will have until January 1, 2022, before the community bank leverage ratio requirement is re-established at greater than 9 percent.

The interim final rules also maintain a two-quarter grace period for a qualifying community banking organization whose leverage ratio falls no more than 1 percent below the applicable community bank leverage ratio.

Securities and Exchange Commission

COVID-19: SEC Updates Compliance and Disclosure Guidance on Form 10-K and Form 40-F Filings

April 6, 2020

The Securities and Exchange Commission (SEC) provided guidance that a registrant that is unable to file the Part III information required by Form 10-K in a timely manner (i.e., within 120 days after the end of a fiscal year) may avail itself of the relief provided by the COVID-19 Order (Release No. 34-88465) as long as the 120-day deadline falls within the relief period specified in the Order and the registrant meets the conditions of the Order. The SEC also indicated that a multijurisdictional disclosure system (MJDS) filer does not need to comply with the conditions for exemptive relief in the SEC’s COVID-19 Order on the date the Form 40-F would be due if that filer also properly relies on any applicable Canadian COVID-19-related relief for extension of its filing deadline.

Commodity Futures Trading Commission

COVID-19: CFTC Issues COVID-19 Customer Advisory on Fee Scams

April 6, 2020

The Commodity Futures Trading Commission issued a Customer Advisory informing the public to be on alert for frauds seeking to profit from recent job losses due to the COVID-19 pandemic. According to the advisory, these frauds may seek to convince customers they can earn unrealistically high profits from home, but later force them to pay excessive “fees” and “taxes” to get their supposed earnings. These frauds typically involve unregistered brokers selling binary options, foreign exchange (forex) programs, and cryptocurrencies. The brokers primarily use social media and messaging apps to target people who have lost their jobs and are looking for replacement income.

Department of Labor

COVID-19: U.S. Department Of Labor Publishes Guidance On Pandemic Unemployment Assistance

April 6, 2020

The U.S. Department of Labor announced the publication of Unemployment Insurance Program Letter (UIPL) 16-20 providing guidance to states for implementation of the Pandemic Unemployment Assistance (PUA) program. Under PUA, individuals who do not qualify for regular unemployment compensation and are unable to continue working as a result of COVID-19, such as self-employed workers, independent contractors, and gig workers, are eligible for PUA benefits. This provision is contained in Section 2102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act enacted on March 27, 2020.

Department of Education

COVID-19: The Department of Education Authorizes New Funding Flexibilities to Support Continued Learning During COVID-19 National Emergency

April 6, 2020

The Department of Education announced a new process for providing states funding flexibilities to meet the needs of students and educators during the COVID-19 national emergency. The new flexibilities, authorized under the Coronavirus Aid, Relief, and Economic Security Act, include allowing schools to repurpose existing K-12 education funds for technology infrastructure and teacher training on distance learning, among other flexibilities to move resources to areas of highest need during the national emergency. A state may complete a form available at oese.ed.gov to receive an initial determination within one business day. Using the form, states can receive flexibility in the use of funds and other requirements covered under the Elementary and Secondary Education Act of 1965 (ESEA), including the Title I, Parts A-D, Title II, Title III, Part A, Title IV, Parts A-B, and Title V programs.

International

European Commission

COVID-19: Commission and European Investment Fund (part of EIB Group) unlock €8 billion in finance for 100,000 small and medium-sized businesses

April 6, 2020

The European Commission unlocked €1 billion from the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF) to address the impact of COVID-19 on small mid-cap companies. This move will allow the EIF to issue special guarantees to incentivize banks and other lenders to provide liquidity to at least 100,000 European SMEs and small mid-cap companies hit by the economic impact of the coronavirus pandemic, for an estimated available financing of €8 billion.

Bank of England

COVID-19: The Bank of England’s Term Funding Scheme with additional incentives for SMEs will open to drawings on 15 April 2020

April 6, 2020

The Bank of England announced that the Term Funding Scheme for Small and Medium-sized Enterprises (TFSME) will open for drawings on 15 April 2020. The TFSME allows eligible banks and building societies to access four-year funding at rates very close to Bank Rate. The scheme is designed to incentivize eligible participants to provide credit to businesses and households to bridge through the current period of economic disruption caused by the outbreak of Covid-19.

Bank of England Prudential Regulatory Authority

UK Financial Conduct Authority

COVID-19: FCA Releases Guidance on Client Assets and Coronavirus (Covid-19)

April 6, 2020

The Financial Conduct Authority released additional guidance on various client assets (CASS) compliance issues including handling checks, CASS audit reports, physical asset reconciliations, depositing client money, notification of CASS breaches, CASS firm classification, and delays to improvement programs.