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PH FedACTion: Financial Regulatory Updates

Daily Financial Regulation Update -- Thursday, August 27, 2020

August 27, 2020

By FedACTion Task Force

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Major Developments

Agencies Finalize Three Capital Rules

August 26, 2020

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation finalized three capital rules, which are either identical or substantially similar to interim final rules currently in effect that were issued earlier this year. The new rules include:

(i) A final rule that temporarily modifies the community bank leverage ratio, as required by the CARES Act;

(ii) A final rule that makes more gradual, as intended, the automatic restrictions on distributions if a banking organization’s capital levels decline below certain levels; and

(iii) A final rule that allows institutions that adopt the current expected credit losses or “CECL” accounting standard in 2020 to mitigate the estimated effects of CECL on regulatory capital for two years.


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.

Federal Agencies

Federal Reserve Board

Fed Board’s Bowman Delivers Speech on COVID-19’s Effect on Economy and Banking

August 26, 2020

Governor Michelle W. Bowman, a member of the Board of Governors of the Federal Reserve System, delivered a speech entitled “The Pandemic’s Effect on the Economy and Banking,” at the Kansas Bankers Association CEO and Senior Management Forum/Annual Meeting.

Federal Deposit Insurance Corporation

FDIC Chairman McWilliams Delivers Speech on Creating Financial System of Inclusion and Belonging

August 26, 2020

Jelena McWilliams, Chairman of the Federal Deposit Insurance Corporation, delivered the keynote speech at a University of Chicago Law School and American Financial Exchange Webinar titled “The Role of Minority Depository Institutions and Innovation in the Age of COVID-19.”

Federal Housing Finance Agency

FHFA Extends Loans in Forbearance Purchases, COVID 19-Related Loan Processing Flexibilities

August 26, 2020

The Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will extend purchases of qualified loans in forbearance and several loan origination flexibilities until September 30, 2020. The flexibilities were set to expire on August 31, 2020.

Fannie, Freddie Delay Implementation of Adverse Market Refinance Fee

August 25, 2020

The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to delay the implementation date of their Adverse Market Refinance Fee until December 1, 2020. The fee was previously scheduled to take effect September 1, 2020. According to the FHFA, the fee is necessary to cover Fannie’s and Freddie’s projected COVID-19-related losses of at least $6 billion.


Bank of England Prudential Regulation Authority

PRA Issues Statement on IFRS 9 and Capital Requirements

August 26, 2020

The Bank of England’s Prudential Regulation Authority issued a statement clarifying the PRA’s approach to International Financial Reporting Standard 9 and capital requirements, in response to the Financial Conduct Authority’s (FCA) updated guidance on retail mortgage payment deferrals. The FCA’s updated guidance explains that, at the end of the existing COVID-19 specific payment deferrals, if borrowers involved are not able to resume payments in full immediately with all deferred sums either paid in full or capitalized, tailored forbearance arrangements provided in accordance with the draft updated guidance should be considered.

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