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Daily Financial Regulation Update - Tuesday, June 23, 2020

June 23, 2020

By FedACTion Task Force

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Congress

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 Deposit Insurance Corporation

FDIC Issues Final Rule to Mitigate the Deposit Insurance Premium Assessment Effect of Participation in the Paycheck Protection Program (PPP), the PPP Liquidity Facility and the Money Market Mutual Fund Liquidity Facility

June 22, 2020

The Federal Deposit Insurance Corporation (FDIC) approved a Final Rule that mitigates the deposit insurance premium assessment effects of participating in the Paycheck Protection Program (PPP), the Paycheck Protection Program Liquidity Facility (PPPLF) and the Money Market Mutual Fund Liquidity Facility (MMLF). Under the Final Rule, the FDIC will generally remove the effect of PPP lending in calculating an insured depository institution’s (IDI’s) deposit insurance assessment. Among other changes, the Final Rule provides an offset to an IDI’s total assessment amount for the increase in its assessment base attributable to participation in the PPP and MMLF.

Office of the Comptroller of the Currency

Assessments: Interim Final Rule

June 22, 2020

The Office of the Comptroller of the Currency (OCC) approved an Interim Final Rule to reduce assessments due to be paid to the OCC in response to the national emergency declared in connection with the COVID-19 pandemic. Under the Interim Final Rule, assessments due on September 30, 2020, for national banks, federal savings associations and federal branches and agencies of foreign banks will be calculated using the December 31, 2019, “Consolidated Reports of Condition and Income” call report for each institution, rather than the June 30, 2020, call report. The change is expected to result in lower assessments for most OCC-supervised institutions. Moreover, if an institution’s assets as reported on the June 30, 2020 call report are lower than on the December 31, 2019 call report, the OCC will calculate the assessment due on September 30, 2020 for the institution using the June 30, 2020 call report.

Federal Reserve Board

Aggregate Demand and Aggregate Supply Effects of COVID-19: A Real-time Analysis

June 22, 2020

The Federal Reserve Board’s Divisions of Research & Statistics and Monetary Affairs released a paper entitled “Aggregate Demand and Aggregate Supply Effects of COVID-19: A Real-time Analysis.” The authors extract aggregate demand and supply shocks for the U.S. economy from real-time survey data on inflation and real GDP growth. Using a novel identification scheme the authors attribute two thirds of the decline in 2020’s Quarter 1 GDP to a negative shock to aggregate demand. In contrast, regarding the staggeringly large decline in GDP in Quarter 2 of 2020, the authors estimate two thirds of this shock was due to a reduction in aggregate supply. Statistical analysis suggests a slow recovery due to persistent effects of the supply shock, but surveys suggest a somewhat faster rebound with a recovery in aggregate supply leading the way.

Federal Reserve Bank of New York

Economic Inequality Policy Series: An Update from the Experts on COVID-19’s Impact on Housing

June 22, 2020

The Federal Reserve Bank of New York, in collaboration with the Urban Institute and NYU Furman Center, will host its second event in a series of discussions on economic inequality on June 25, 2020. The event, entitled “Economic Inequality Policy Series: An Update from the Experts on COVID-19’s Impact on Housing,” will highlight current research on the housing market and will include conversations with researchers and policy-influencers on the impact of the COVID-19 pandemic on homeowners and renters. The forum will also address the impact of the COVID-19 crisis on housing security, wealth building and models for an equitable recovery.