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Daily Financial Regulation Update -- Tuesday, November 10, 2020

November 10, 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 Reserve Board

Vice Chair Quarles Provides Testimony on Federal Reserve’s COVID-19-Related Supervisory Activities

November 10, 2020

Randal K. Quarles, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System (Federal Reserve), testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs regarding the Federal Reserve’s supervisory activities in the context of COVID-19. In his testimony, Vice Chair Quarles summarized the steps taken to date by the Federal Reserve in response to the COVID-19 pandemic, and asserted that “[l]iquidity and capital remain high and, indeed, have increased at our largest banks over the course of the COVID event,” “[f]irms have sharply increased their reserves, setting aside resources today against losses they may incur tomorrow,” and “[b]anks are well positioned to serve as a bulwark against broader financial and economic stress.”

Federal Reserve Board Releases November 2020 Financial Stability Report

November 9, 2020

The Board of Governors of the Federal Reserve System released its November 2020 Financial Stability Report (Report). The Report reviews conditions affecting the stability of the financial system by analyzing vulnerabilities related to valuation pressures, borrowing by businesses and households, financial leverage and funding risk, and highlights several near-term risks that, if realized, could interact with such vulnerabilities.

Federal Reserve Board Releases October 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices

November 9, 2020

The Board of Governors of the Federal Reserve System released its October 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices (Opinion Survey). The Opinion Survey addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2020.

Federal Reserve Bank of New York

FRBNY’s Center for Microeconomic Data Releases October 2020 SCE Household Spending Survey Findings

November 9, 2020

The Federal Reserve Bank of New York’s Center for Microeconomic Data released findings from the October 2020 Survey of Consumer Expectations Household Spending Survey (Survey), which shows a decline in income and spending growth expectations. According to the Survey, changes in labor market expectations were mixed showing declines in both average job loss and job finding expectations; median inflation expectations declined at the short-term horizon, while remaining unchanged at the medium-term horizon; and, uncertainty and disagreement about future inflation decreased slightly but remained at an elevated level.

FRBNY Publishes Blog Post on U.S. Remittances to Latin America during COVID-19

November 9, 2020

The Federal Reserve Bank of New York published a Liberty Street Economics blog post (Post) entitled “Has the Pandemic Reduced U.S. Remittances Going to Latin America?” In the Post, the authors find that workers’ remittances—funds that migrants send to their country of birth—are an important source of income for a number of economies in Latin America, with the bulk of these funds coming from the United States. The Post’s authors find that such remittances initially faltered under the COVID-19 recession, but rebounded in the summer months, performing better than during the last U.S. recession despite more severe job losses.

Federal Reserve Board’s Divisions of Research & Statistics and Monetary Affairs Publish Paper on Worker Earnings Losses during COVID-19

November 9, 2020

The Board of Governors of the Federal Reserve System’s Divisions of Research & Statistics and Monetary Affairs published a paper (Paper) titled “Financial Profiles of Workers Most Vulnerable to Coronavirus-Related Earnings Loss in the Spring of 2020,” as part of the Finance and Economics Discussion Series. The Paper’s authors find that families with non-teleworkable workers who were most vulnerable to layoff also had both demographic and financial profiles that are associated with greater vulnerability to income shocks: non-teleworkable families were more likely to be people of color and single wage-earners, and also to have less savings. The Paper’s authors further find that the median non-teleworkable family, whether in non-essential or essential occupations, held only three weeks of income in savings, underscoring the importance of policy measures to blunt the financial effect of the COVID-19 crisis.

Office of the Comptroller of the Currency

OCC Reports Key Risks, Effects of COVID-19 in Federal Banking System

November 9, 2020

The Office of the Comptroller of the Currency (OCC) reported the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry in its Semiannual Risk Perspective for Fall 2020 (Report). According to the Report, banks remain in strong financial condition but profitability is stressed due to low interest rates and increasing levels of provisions for problem loans. The OCC reported credit, strategic, operational and compliance risks, among the key risk themes in the Report.

Securities and Exchange Commission

SEC Chairman Clayton, Commissioner Peirce Deliver Remarks at Small Business Capital Formation Advisory Committee Meeting

November 9, 2020

Jay Clayton, Chairman of the U.S. Securities and Exchange Commission (SEC), and Hester M. Peirce, Commissioner of the SEC, both delivered remarks at a meeting of the SEC’s Small Business Capital Formation Advisory Committee. The meeting agenda included discussion of concrete actions the SEC can take to help small businesses address ongoing capital needs in the face of economic stress resulting from COVID-19.

Ginnie Mae

Ginnie Mae to Allow Alternative Procedures for Certain Aspects of Issuer Annual Audit Report for Fiscal Year 2020

November 9, 2020

In an All Participant Memorandum (Memorandum), Ginnie Mae announced that, due to the impact of COVID-19, it is allowing the use of certain alternative audit procedures, set forth in detail in the Memorandum, for Ginnie Mae mortgage-backed securities issuers with a fiscal year ending on or before December 31, 2020.

International

Bank of England Prudential Regulation Authority

Prudential Regulation Authority Issues Statement on COVID-19 Guidance for Firms

November 9, 2020

The Bank of England’s Prudential Regulation Authority (PRA) issued a statement (Statement) replacing previous guidance related to COVID-19 measures for PRA-regulated firms, in light of updates from the UK Government. The Statement recommends that the Chief Executive Officer senior management function be accountable for ensuring an adequate process for following and adhering to UK Government guidance.