PH FedACTion: Financial Regulatory Updates

Daily Financial Regulation Update - Saturday, June 27, 2020

June 27, 2020

FedACTion Task Force

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Major Developments

SBA and Treasury Issue an Additional Interim Final Rule on Certain Eligible Payroll Costs for the Paycheck Protection Program

June 25, 2020

The U.S. Small Business Administration issued a new Interim Final Rule (IFR), supplementing previously issued IFRs by providing additional guidance on certain payroll costs that may be reported in connection with certain Paycheck Protection Program (PPP) loan and loan forgiveness applications. The IFR clarifies that:

(i) Fishing boat owners may include payroll costs in their PPP loan applications that are attributable to crewmembers described in Section 3121(b)(20) of the Internal Revenue Code (Code); but

(ii) Fishing boat owners may not include as payroll costs in applications for loan forgiveness compensation paid to any crewmember who received his or her own PPP loan and is seeking forgiveness for amounts of compensation the crewmember received for performing services described in Section 3121(b)(20) of the Code with respect to that owner’s fishing boat.

SBA and Treasury Update Paycheck Protection Program FAQs

June 25, 2020

The U.S. Department of the Treasury and U.S. Small Business Administration (SBA) have updated their FAQs on the Paycheck Protection Program (PPP) with guidance on PPP loan maturity dates (FAQ 49). If a PPP loan received an SBA loan number on or after June 5, 2020, the loan has a five-year maturity. If a PPP loan received an SBA loan number before June 5, 2020, the loan only has a two-year maturity, unless the borrower and lender mutually agree to extend the term of the loan to five years.


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

Securities and Exchange Commission

An Update on the Commission’s Targeted Regulatory Relief to Assist Market Participants Affected by COVID-19 and Ensure the Orderly Function of our Markets

June 26, 2020

The U.S. Securities and Exchange Commission (SEC) issued a public statement on its targeted regulatory relief to assist market participants affected by COVID-19.

National Credit Union Association

NCUA to Delay Start of Phased Resumption of Onsite Operations

June 26, 2020

The National Credit Union Administration (NCUA) announced it is delaying the start of its phased resumption of onsite operations. The NCUA will continue to coordinate offsite examination and supervision efforts with state supervisory authorities.


Bank of England

Economic Uncertainty Before and During the COVID-19 Pandemic

June 26, 2020

The Bank of England (BoE) has issued a working paper where it discusses economic uncertainty before and during the COVID-19 pandemic. BoE considers several economic uncertainty indicators for the US and UK before and during the COVID-19 pandemic: implied stock market volatility, newspaper-based economic policy uncertainty, twitter chatter about economic uncertainty, subjective uncertainty about future business growth, and disagreement among professional forecasters about future GDP growth, identifying three trends:

First, all indicators show huge uncertainty jumps in reaction to the pandemic and its economic fallout. Most indicators reach their highest values on record.

Second, peak amplitudes differ greatly from a rise of around 100% (relative to January 2020) in two-year implied volatility on the S&P 500 and subjective uncertainty around year-ahead sales for UK firms to a 20-fold rise in forecaster disagreement about UK growth.

Third, time paths also differ: implied volatility rose rapidly from late February, peaked in mid-March, and fell back by late March as stock prices began to recover. In contrast, broader measures of uncertainty peaked later and then plateaued, as job losses mounted, highlighting the difference in uncertainty measures between Wall Street and Main Street.

How Will the COVID-19 Shock Affect the Cash Flows of UK Companies?

June 26, 2020

The Bank of England (BoE) issued a post discussing how the COVID-19 shock will affect the cash flows of UK companies. BoE estimates that companies could face an aggregate cash-flow deficit of around £140 billion from Q2 2020 to Q1 2021. It notes the government has put in place a number of fiscal measures in response to the shock, including the Coronavirus Job Retention Scheme, which helps to pay the incomes of furloughed workers. In the absence of the fiscal support schemes, BoE estimates that the aggregate cash-flow deficit of UK companies would be larger, at £190 billion.

Bank of England Prudential Regulation Authority

Statement by the PRA on COVID-19 Regulatory Reporting and Disclosure Amendments

June 26, 2020

The Bank of England Prudential Regulation Authority (PRA) issued a statement which outlines the PRA’s revised approach to regulatory reporting and Pillar 3 disclosure for PRA-regulated banks in response to the COVID-19 pandemic.

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