PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Tuesday, June 30, 2020
June 30, 2020
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Major Developments
The Federal Reserve Bank of New York Announces Launch of Primary Market Corporate Credit Facility
June 29, 2020
The Federal Reserve Bank of New York (FRBNY) announced the Primary Market Corporate Credit Facility (PMCCF) is operational and available for use. The PMCCF provides a funding backstop for corporate debt to eligible issuers and is available to (i) purchase qualifying bonds as the sole investor in a bond issuance and (ii) purchase portions (up to 25%) of syndicated bonds at issuance (“co-investor” transactions).
The FRBNY also released the relevant certification forms, other transaction documentation and related materials, and additional Frequently Asked Questions (FAQs) regarding access to the PMCCF.
Federal Reserve Board Releases New Term Sheet for PMCCF
June 29, 2020
The Board of Governors of the Federal Reserve System released a new term sheet for the Primary Market Corporate Credit Facility (PMCCF), adding pricing and other information. As detailed in newly-released Frequently Asked Questions (FAQ), under the new term sheet, pricing will be issuer-specific and informed by market conditions, and, prices will also be subject to minimum and maximum spreads over comparable maturity Treasury securities.
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.
Federal Agencies
Department of the Treasury
Mnuchin Issues Statement on the Launch of the Primary Market Corporate Credit Facility
June 29, 2020
Steven Mnuchin, Secretary of the U.S. Department of the Treasury, issued a statement on the launch of the Primary Market Corporate Credit Facility (PMCCF). In his statement, Secretary Mnuchin noted that “[b]y providing large employers access to backstop funding, the PMCCF will help U.S. businesses maintain their operations and support a robust recovery as we continue to safely reopen our economy.”
Federal Reserve Board
Powell Issues Written Testimony on COVID-19 and CARES Act to House Financial Services Committee ahead of Oral Testimony
June 29, 2020
Jerome Powell, Chair of the Board of Governors of the Federal Reserve System, delivered testimony entitled “Coronavirus and CARES Act,” prior to the House Committee on Financial Services’ June 30, 2020 hearing entitled, “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.”
Federal Reserve Bank of New York
New York Fed Publishes Blog Post on Municipal Debt Markets and COVID-19
June 29, 2020
The Federal Reserve Bank of New York (FRBNY) published a blog post entitled “Municipal Debt Markets and the COVID-19 Pandemic”. In the post, the FRBNY describes the evolution of municipal bond market conditions since the onset of COVID-19, and states that conditions in municipal markets have improved significantly, in part as a result of the announcement and implementation of several Federal Reserve facilities. The FRBNY further states that yields have decreased substantially, mutual funds have received significant inflows, and issuance has rebounded, and that these improvements in municipal market conditions have helped to ensure that state and local governments have better access to funding for critical capital investments.
Federal Reserve Bank of Boston
Federal Reserve Bank of Boston Releases Study on COVID-19’s Effects on Regional Labor Markets
June 29, 2020
The Federal Reserve Bank of Boston (FRBBOS) released a study (Study) entitled “An Approach to Predicting Regional Labor Market Effects of Economic Shocks: The COVID-19 Pandemic in New England”. In the Study, the FRBBOS uses pre-pandemic employment data by occupation and a conceptual framework focused on labor costs to identify the subpopulation most vulnerable to the economic shock, and to predict layoffs and unemployment in the second quarter of 2020. The analysis utilized in the Study allows for the possibility of wage cuts mitigating job losses. Official estimates of unemployment from available second-quarter data fall within the Study’s range of predictions.
Office of the Comptroller of the Currency
OCC Highlights Key Risks for Federal Banking System due to COVID-19
June 29, 2020
In its “Semiannual Risk Perspective” for Spring 2020 (Report), the Office of the Comptroller of the Currency (OCC) reported on the key risks facing the federal banking system in the wake of COVID-19. The key risks identified in the Report include that bank profitability will be challenged as interest rates are at historic lows, past due loans and provisions for loan losses are increasing, and operational expenses are rising; and, that record high unemployment levels and business closings will stress credit risk management.
U.S. Small Business Association
SBA Releases Fact Sheet on COVID-19’s Impact on Restaurants, Bars
June 29, 2020
In a newly-released fact sheet (Fact Sheet), the U.S. Small Business Administration (SBA) reported that COVID-19 caused a decline in leisure and hospitality employment that was more than twice the decline for any other industry group. According to the Fact Sheet, employment in leisure and hospitality in May 2020 decreased 41% relative to May 2019, while the declines in employment in other areas, over the same time period, ranged from 2% to 18%. The Fact Sheet further states that in May 2020, employment in food services and drinking places, the largest category of businesses within leisure and hospitality, was 37% lower than in May 2019.
Federal Housing Finance Agency
FHFA Announces New COVID-19 Forbearance Options and Tenant Protections
June 29, 2020
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) are allowing servicers to extend existing forbearance agreements for multifamily property owners for up to three months, for a total forbearance of up to six months. According to the FHFA’s announcement, while the properties are in forbearance, the landlord must suspend all evictions for renters unable to pay rent. Further according to the announcement, the forbearance extension is available for qualified properties with an Enterprise-backed multifamily mortgage experiencing a financial hardship due to COVID-19.