PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Thursday, June 18, 2020
June 18, 2020
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Major Developments
SBA and Treasury Announce New EZ and Revised Forgiveness Applications for the Paycheck Protection Program
June 17, 2020
The U.S. Small Business Administration (SBA), in consultation with the U.S. Department of the Treasury, posted a revised, borrower-friendly Paycheck Protection Program (PPP) loan forgiveness application implementing the Paycheck Protection Program Flexibility Act of 2020 (PPP Flexibility Act) enacted on June 5, 2020. In addition to revising the full PPP loan forgiveness application, SBA also published a new “EZ version” of the forgiveness application that applies to borrowers that:
(i) are self-employed and have no employees;
(ii) did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number of hours of their employees; or
(iii) experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
Both applications give borrowers seeking PPP loan forgiveness the option of using the original eight-week covered period (if their loan was made before June 5, 2020) or the extended 24-week covered period authorized in the PPP Flexibility Act.
SBA Issues a New Interim Final Rule Revising the Third and Sixth Interim Final Rules on the Paycheck Protection Program
June 17, 2020
The U.S. Small Business Administration issued a new Interim Final Rule for the Paycheck Protection Program (PPP), revising key provisions of its April 14, 2020 and April 28, 2020 Interim Final Rules to conform to the Paycheck Protection Program Flexibility Act of 2020. The new Interim Final Rule:
(i) amends the covered period for PPP loans;
(ii) revises the loan maturity date for PPP loans made on or after June 5, 2020;
(iii) clarifies that for purposes of determining the percentage of use of loan proceeds for payroll costs (but not for forgiveness purposes), the amount of any refinanced Economic Injury Disaster Loan will be included; and
(v) clarifies the amount of the PPP loan eligible for forgiveness.
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. House of Representatives
Committee on Small Business
Chairwoman Velázquez Leads 12 Committee Democrats in Urging SBA to Release Demographic Data of PPP & EIDL Recipients
June 16, 2020
House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) and 12 Committee Democrats wrote to U.S. Treasury Secretary Steven T. Mnuchin and Small Business Administration Administrator Jovita Carranza asking the agencies to immediately begin publishing the demographic data of recipients of the Paycheck Protection Program and the Economic Injury Disaster Loan program. The letter was sent in response to the lack of guidance issued to prioritize lending to underserved businesses.
Committee on Financial Services
Congresswoman Waters at Hearing with Fed Chair: Communities of Color Suffering Disproportionately During Pandemic Crisis
June 17, 2020
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, made an opening statement at the hearing on Monetary Policy and the State of the Economy. She noted that communities of color are suffering disproportionately from the coronavirus. She urged strong fiscal policy from Congress in the form of the HEROES Act, which was passed last month by the House of Representatives to extend assistance to states, cities, the unemployed, as well as renters and homeowners.
Federal Agencies
Federal Reserve Bank of New York
New York Fed Releases Updated Documents for the Term Asset-Backed Securities Loan Facility
June 17, 2020
The Federal Reserve Bank of New York has released the following updated documents for the Term Asset-Backed Securities Loan Facility:
New York Fed Publishes Blog Post on State Reopenings
June 17, 2020
The Federal Reserve Bank of New York published a Liberty Street Economics blog post entitled “Did State Reopenings Increase Social Interactions.”
Office of the Comptroller of the Currency
COVID-19 Relief Programs: Preemption
June 17, 2020
The Office of the Comptroller of the Currency (OCC) released a bulletin on COVID-19 relief programs and federal preemption. Federal, state and local governments have taken many actions to respond to the economic disruption caused by the spread of COVID-19. Although the OCC recognizes that a wide range of stakeholders, including state and local governments, have an important role to play in the country’s COVID-19 response, the OCC reminded stakeholders that national banks and federal savings associations are governed primarily by uniform federal standards and generally are not subject to state law limitations. The OCC encouraged states and localities to expressly exempt federally-chartered banks from their laws and invited states and localities to reach out to the OCC with any concerns.
Department of Housing and Urban Development/Federal Housing Administration
FHA Extends Foreclosure and Eviction Moratorium for Single Family Homeowners for Additional Two Months
June 17, 2020
The Federal Housing Administration (FHA) announced a two-month extension of its foreclosure and eviction moratorium through August 31, 2020, for homeowners with FHA-insured Single Family mortgages. The FHA’s Single Family foreclosure and eviction moratorium extension applies to homeowners with FHA-insured Title II Single Family forward and Home Equity Conversion (reverse) mortgages, and continues to direct mortgage services to (i) halt all new foreclosure actions and suspend all foreclosure actions currently in process, excluding legally vacant or abandoned properties, and (ii) cease all evictions of persons from FHA-insured Single Family properties, excluding actions to evict occupants of legally vacant or abandoned properties.
International
European Banking Authority
EBA Publishes its First Peer Review of the Stress Tests and the Resilience of Deposit Guarantee Schemes (DGSs)
June 17, 2020
The European Banking Authority (EBA) published its first peer review of stress tests and the resilience of the Deposit Guarantee Scheme (DGSs). The peer review assessed the resilience of DGSs based on the results of the DGS stress tests and identified good practices and areas for improvement. Although the peer review performed by the EBA is a regular exercise required by the DGSD, it also includes provisions stemming from the COVID-19 pandemic. The report outlines lessons learned from a real-life payout case in one EU Member State that coincided with the pandemic.
Bank of England Prudential Regulation Authority
Insurance Stress Test 2019 and COVID-19 Stress Testing: Feedback for General and Life Insurers
June 17, 2020
The Bank of England Prudential Regulation Authority (PRA) released a letter sent to firms participating in the Insurance Stress Test 2019 exercise and its engagement on COVID-19 stresses. The letter sets forth the PRA’s findings from such exercises, and notes that it expects boards of directors to assess whether the findings apply to their firms and present an action plan to their supervisors to address them. The PRA understands that firms may need longer to address such findings, given the uncertainty and demands arising from COVID-19.