PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update -- Saturday, August 1, 2020
August 01, 2020
FedACTion Task Force
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Major Developments
Boston Fed Issues New Legal Documents for Main Street Lending Program Nonprofit Loan Facilities and Updates FAQs
July 31, 2020
The Federal Reserve Bank of Boston (Reserve Bank) released amended forms and agreements to include the two new nonprofit loan facilities—the Nonprofit Organization New Loan Facility (NONLF) and the Nonprofit Organization Expanded Loan Facility (NOELF)—recently established for eligible nonprofit organizations under the Main Street Lending Program (Program). The documents include technical changes to accommodate multi-borrower loans and simplify terms.
In addition, the Program FAQs for eligible nonprofit organizations and the Program FAQs for eligible for-profit entities were updated.
Changes to the FAQs for eligible nonprofit organizations include:
a Loan Document Checklist for NONLF and NOELF loans (FAQ Appendix A),
a list of required covenants to be included in NONLF and NOELF loan documents (FAQ Appendix B),
requirements for ongoing borrower financial reporting (FAQ Appendix C),
prohibitions on the use of proceeds of a Main Street loan under the NONLF and NOELF (FAQ G.21),
information about required certifications and covenants for the NONLF and NOELF (FAQ H.1, FAQ H.10, FAQ H.11, FAQ H.18, FAQ H.19),
financial and other information needed to sell participations to the Main Street SPV (FAQ L.8, FAQ L.9), and
other topics related to program operations (including specific guidance for borrowers and lenders, requirements for loan participations, regulatory treatment, and other operational details).
Changes to the FAQs for eligible for-profit entities include:
upcoming functionality to accommodate co-borrower transactions (FAQ L.12),
the collateral coverage ratio requirements for the Main Street Priority Loan Facility (FAQ C.5),
restrictions on compensation and capital distributions for pass-through entities (FAQ H.16),
Employee Stock Ownership Plans and direct loan restrictions (FAQ H.17), and
the applicability of direct loan restrictions to a borrower’s successors (FAQ H.18).
The Program is not yet accepting NONLF, NOELF or multi-borrower loans. The Reserve Bank will announce when NONLF, NOELF and multi-borrowers loans can be submitted and processed.
New York Fed Issues Revised FAQs for TALF
July 31, 2020
The Federal Reserve Bank of New York issued revised Frequently Asked Questions for the Term Asset-Backed Securities Loan Facility.
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.
U.S. Senate
Committee on Small Business and Entrepreneurship
Criticism of Purported Lobbying Effort to Reduce Bank Capital Levels
July 31, 2020
U.S. Senators Sherrod Brown (D-OH), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs (Committee), and Elizabeth Warren (D-MA), Ranking Member of the Committee’s Subcommittee on Consumer Protection and Financial Institutions in a series of letters asserted that Randal K. Quarles, Vice Chair for Supervision of the Federal Reserve, has engaged in a “significant lobbying effort” to urge Congress to authorize the Federal Reserve, in the COVID-19 stimulus bills, the ability to relax rules designed to constrain risk-taking by ensuring banks have sufficient capital on hand in the event of a major downturn in connection with the COVID-19 stimulus bills adopted by Congress. Senators Brown and Warren specifically cited a letter written by Quarles in April 2020, in which he urged Congress to modify Section 171 of the Dodd-Frank Act to “improve regulatory flexibility.”
Federal Agencies
Federal Housing Finance Agency
FHFA Approves Extension of Temporary Policy Allowing Purchase of Qualified Loans in Forbearance
July 31, 2020
The Federal Housing Finance Agency approved an extension of the temporary policy, originally announced in April, 2020, that allows for the purchase of certain qualifying single-family mortgages in forbearance. The extension continues the temporary policy for loans originated through August 31, 2020.
Freddie Mac
Freddie Mac Multifamily Releases Midyear Outlook
July 31, 2020
Freddie Mac Multifamily (FMM) released its 2020 Midyear Outlook (Outlook), which projected marginal reductions in rents and increased vacancies as the multifamily market responds to the economic effects of COVID-19. According to the Outlook, although total multifamily origination volume is expected to decline in 2020 relative to 2019, FMM anticipates its own production volume will remain consistent as it works to provide liquidity to the market.
International
Bank of England
Bank of England Shares Expertise with African and Asian Central Banks
July 31, 2020
According to a Bank of England (Bank) News Release, through a plan funded by the UK government, Bank staff are sharing their expertise on forecasting, managing and mitigating the economic and financial impacts of COVID-19 with central banks in Africa and Asia, including the South African Reserve Bank and the 15 central banks in the South African Development Community.