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Daily Financial Regulation Update - Thursday, April 2, 2020

April 03, 2020

By FedACTion Task Force

Major Developments

COVID-19: SBA Adopts Interim Final Rule Implementing the Paycheck Protection Program

April 2, 2020

The Small Business Administration (SBA) adopted an Interim Final Rule outlining key provisions implementing the Paycheck Protection Program under the CARES Act. The rule describes among other things eligible borrowers, amounts of loans and eligible lenders, including all depository institutions not deemed in troubled condition.

COVID-19: Waters to Mnuchin and Carranza: Paycheck Protection Program Funds Must Not Be Used to Pay Private Equity or Other Funds

April 2, 2020

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, sent a letter to Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza stating that “any funds granted through this program must not be used to pay any debts or obligations to private funds, including management or consulting fees.” The letter states that the funds are intended to help companies maintain workforce levels, pay and benefits, and provide workers with a minimum of two weeks paid leave.

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.

U.S. House of Representatives

Committee on Financial Services

COVID-19: Congresswoman Waters Calls on SEC and Treasury to Maintain Protections for Non-Traditional Workers During COVID-19 Crisis

April 2, 2020

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, sent a letter to Securities and Exchange Commission Chairman Jay Clayton and Treasury Secretary Steven Mnuchin, urging them to uphold safeguards put in place to protect non-traditional workers—such as contractors, freelancers, and those in the gig economy— during the Coronavirus pandemic.

COVID-19: During COVID-19 Crisis, Waters Calls on Treasury and SBA to Allow All Local, Community Financial Institutions to Participate in Program to Support Small Businesses

April 1, 2020

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, sent a letter to Steven Mnuchin, Secretary of the U.S. Department of the Treasury, and Jovita Carranza, Administrator of the U.S. Small Business Administration (SBA), requesting that they ensure that all financial institutions, including community banks, credit unions, minority depository institutions, and Community Development Financial Institutions, have the resources they need to participate in the Paycheck Protection Program.

COVID-19: Committee Releases Answers to Frequently Asked Questions About the CARES Act

April 1, 2020

The House Financial Services Committee, released a document with answers to frequently asked questions regarding financial services provisions in H.R. 748, the Coronavirus Aid, Relief and Economic Security Act (CARES Act).,

Federal Agencies

Department of Treasury

COVID-19: Treasury and the IRS Announce that Social Security Recipients Will Automatically Receive Economic Impact Payments

April 1, 2020

The U.S. Department of the Treasury and the Internal Revenue Service announced that Social Security beneficiaries who are not required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Payments will be automatically deposited into their bank accounts.

Federal Reserve Board

COVID-19: Federal Reserve Board announces temporary change to its supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus

April 1, 2020

The Federal Reserve Board announced a temporary change to its supplementary leverage ratio rule which generally applies to financial institutions with more than $250 billion in total consolidated assets. Changes to the rule would temporarily decrease tier 1 capital requirements of holding companies by approximately 2 percent in aggregate, and exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies. The rule will be in effect until March 31, 2021.

Federal Deposit Insurance Corporation

COVID-19: FDIC Releases Letter Advising of New SBA and Treasury Programs Available for Small Business Relief

April 2, 2020

The Federal Deposit Insurance Corporation (FDIC) released a letteradvising on multiple forms of relief available in the Coronavirus Aid, Relief, and Economic Security (CARES) Act available to small businesses through loan programs administered by the Small Business Administration (SBA) and The U.S. Department of the Treasury (Treasury).

Securities and Exchange Commission

COVID-19: SEC Chairmain Jay Clayton Issues Statement Outlining the SEC’s Response to the Coronavirus crisis.

April 2, 2020

Securities and Exchange Commission (SEC) Chairman Jay Clayton issued a statement outlining the SEC’s approach to the allocation of resources, oversight and rulemaking, and Regulation of Best Interest (RBI) and Form CRS implementation during the COVID-19 crisis. These actions have focused on operational issues, including facilitating the shift to business continuity plans that are consistent with health and safety directives and guidance.

FINRA

COVID-19: FINRA Proposes Rule Change to Provide Members with Additional Time to Comply with the Amendments Adopted by SR-FINRA-2019-014

April 1, 2020

Financial Industry Regulatory Authority, Inc. (FINRA) is filing with the Securities and Exchange Commission a proposed rule change to provide members impacted by the COVID-19 pandemic with additional time to comply with the amendments adopted by SR-FINRA-2019-014 related to transactions in U.S. Treasury Securities executed to hedge certain primary market transactions

Department of Housing and Urban Development/Federal Housing Administration

COVID-19: HUD To Make $3 Billion Of Covid-19 Relief Funding Available
April 2, 2020

The U.S. Department of Housing and Urban Development (HUD) announced it is making $3.064 billion for COVID-19 relief via existing grant formulas. The funds include $2 billion allocated under the Community Development Block Grant program, $1 billion for homeless services under the Emergency Solutions Grant program, and $63.7 million to help individuals with compromised immune systems under the Housing Opportunities for Persons With AIDS program.

COVID-19: HUD Issues New Cares Act Mortgage Payment Relief For FHA Single Family Homeowners

April 1, 2020

The U.S. Department of Housing and Urban Development announced the implementation of provisions contained in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for mortgage payment relief options for single family homeowners with FHA-insured mortgages impacted by COVID-19. Also included is an extension period for seniors with Home Equity Conversion Mortgages. Effective immediately, mortgage servicers must extend deferred or reduced mortgage payment options for up to six months, and must provide an additional six months of forbearance if requested by the borrower.

Department of Labor

COVID-19: Unemployment Insurance Weekly Claims Hit Record Highs Due to COVID-19 Crisis

April 2, 2020

In the week ending March 28, the advance figure for seasonally adjusted initial unemployment insurance claims was 6,648,000, an increase of 3,341,000 from the previous week's revised level. This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series.

State Agencies

New York Department of Financial Services

COVID-19: DFS To Take Regulatory Action Requiring Health Insurers To Defer Payment Of Premiums Through June 1st Due To Covid-19 Pandemic

April 2, 2020

The New York State Department of Financial Services (DFS) announced it will require health plans to defer the payment of insurance premiums due under individual and small group health commercial insurance plans through June 1st for consumers and businesses experiencing financial hardship due to the COVID-19 pandemic. Through June 1, 2020, individual and small group commercial health insurance plans will be required to continue to pay claims for consumers and businesses and health plans will not report late payments to credit rating agencies.

International

European Commission

COVID-19: European Commission announces €100 billion solidarity instrument to aid member states in their response to COVID-19

April 2, 2020

The European Commission proposed creating a €100 billion solidarity instrument called SURE that provides loans to member countries during the COVID-19 crisis. The loans will be based on guarantees provided by member states and will be directed to where they are most urgently needed. The instrument includes the Fund for European Aid to the Most Deprived, support for fishermen and farmers, redirecting all available structural funds to COVID-19 response, and an Emergency Support Instrument.

European Banking Authority

COVID-19: EBA publishes guidelines on treatment of public and private moratoria in light of COVID-19 measures

April 2, 2020

Following the publication of its statement on the application of the prudential framework regarding default, forbearance and IFRS9 in light of COVID-19 measures, the European Banking Authority (EBA) published more detailed guidance on the criteria to be fulfilled by legislative and non-legislative moratoria applied before 30 June 2020. These guidelines clarify the requirements for public and private moratoria, which if fulfilled, will help avoid the classification of exposures under the definition of forbearance or as defaulted under distressed restructuring.

Bank of England

The Bank of England Announces the Purchase of Additional Corporate Bond Purchases

April 2, 2020

The Bank of England (Bank) announced it intends to purchase at least £10 billion of eligible sterling non-financial corporate bonds in coming the months, taking the stock of purchased corporate bonds to at least £20 billion. The Bank has increased the maximum purchase size per bond in each auction from £10mn to £20mn and will undertake operations via reverse auctions beginning on 7 April 2020. The Bank intends initially to hold three purchase operations a week on Tuesdays, Wednesdays and Thursdays.

Bank of England Prudential Regulation Authority

COVID-19: The PRA publishes statement on Covid-19 regulatory reporting and disclosure amendments

April 2, 2020

The Prudential Regulation Authority (PRA) published a statement outlining its approach to regulatory reporting and Pillar 3 disclosures for UK banks, building societies, designated investment firms and credit unions in response to Covid-19 and the European Banking Authority’s statement on ‘Supervisory reporting and Pillar 3 disclosures in light of Covid-19’ which was published on Tuesday 31 March 2020. The Bank also published a notice with guidance for firms on statistical reporting.

April 2, 2020

The Prudential Regulation Authority (PRA) published Policy Statement 9/20, which provides feedback to responses to Consultation Paper 23/19 ‘Solvency II: Income producing real estate loans and internal credit assessment for illiquid, unrated assets.’ The statement alsocontains the PRA’s final Supervisory Statement (SS) 3/17, ‘Solvency II: Illiquid unrated assets.’ In consideration of the responses it received on the CP, the PRA has decided to maintain the expectations set out in CP23/19, but has revised the wording of the SS to clarify some of these expectations.

UK Financial Conduct Authority

COVID-19: FCA proposes temporary financial relief for customers impacted by coronavirus

April 2, 2020

The Financial Conduct Authority (FCA) proposed a range of targeted temporary measures designed as a stop-gap to support users of certain consumer credit products who are facing a financial impact arising from the coronavirus. The package is intended to complement measures already announced by the government to support mortgage holders (and renters) and the assistance being provided for furloughed employees and the self-employed.