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Daily Financial Regulation Update -- Tuesday, October 6, 2020

October 06, 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 Bank of New York

FRBNY Issues Revised FAQs for Municipal Liquidity Facility

October 5, 2020

The Federal Reserve Bank of New York issued revised Frequently Asked Questions for the Municipal Liquidity Facility.

Procurement Process for Vendor Roles Supporting Emergency Lending Facilities Commences

October 5, 2020

The Federal Reserve Bank of New York (New York Fed) announced it is initiating a multiphase competitive procurement process for key vendor roles across several of the emergency lending facilities established under Section 13(3) of the Federal Reserve Act, and purchase of agency commercial mortgage-backed securities. Among such roles will be a cash investment manager to manage the reinvestment of cash flows generated by the Secondary Market Corporate Credit Facility (SMCCF) and the Primary Market Corporate Credit Facility (PMCCF). In addition, the New York Fed will soon be filling investment management roles for the PMCCF and SMCCF, as well as roles for other facilities, including the Commercial Paper Funding Facility, the Term Asset-Backed Securities Loan Facility and agency CMBS.

FRBNY Publishes Blog Post Examining the Banking Industry and COVID-19

October 5, 2020

The Federal Reserve Bank of New York published a Liberty Street Economics blog post (Post) entitled “The Banking Industry and COVID-19: Lifeline or Life Support?” In the Post, the authors consider the implications of the COVID-19 pandemic for the stability of the banking sector, including the potential impact of dividend suspensions on bank capital ratios and the use of banks’ regulatory capital buffers.

Federal Reserve Bank of Boston

Third Quarter Snapshot of New England Economy Published

October 5, 2020

The Federal Reserve Bank of Boston published a report titled “Q3 2020: Snapshot of the New England Economy through September 24, 2020” (Snapshot). According to the Snapshot, through August 2020, both the New England region and the United States experienced sharp declines in economic conditions relative to the first months of 2020; payroll employment dropped and unemployment rates rose dramatically relative to one year prior, though the August 2020 rates improved relative to the spring of 2020; leisure and hospitality employment was affected most among the supersectors; and, through the second quarter of 2020, in both the region and the nation, home prices appreciated compared to the same period in 2019.

Securities and Exchange Commission

SEC Releases Report on U.S. Credit Market Interconnectedness and the Effects of COVID-19

October 5, 2020

The U.S. Securities and Exchange Commission (SEC) published a staff report (Report) titled “U.S. Credit Markets: Interconnectedness and the Effects of the COVID-19 Economic Shock”, which focuses on the origination, distribution and secondary market flow of credit across U.S. credit markets. The Report also addresses how the related interconnections in U.S. credit markets operated as the effects of the COVID-19 pandemic took hold. On October 14, 2020, SEC staff will host a Roundtable on Interconnectedness and Risk in U.S. Credit Markets to discuss the issues raised in the Report.

International

European Banking Authority

EBA Publishes Quarterly Risk Dashboard

October 5, 2020

The European Banking Authority (EBA) published its Risk Dashboard for the second quarter of 2020. The Risk Dashboard summarizes the main risks and vulnerabilities in the European Union’s banking sector. The Risk Dashboard’s findings include that, while capital ratios held up well, there are indications that the COVID-19 crisis has begun to impact asset quality, and, with increasing cost of risk, profitability continued its declining trend.

Bank of England

Bank Blog Post Explores COVID-19’s Impact on Unemployment

October 5, 2020

The Bank of England published a Bank Overground blog post (Post) entitled “How Persistent Will the Impact of Covid-19 on Unemployment Be?” In the Post, the authors consider that unemployment has been slow to fall from peaks in the past, but suggest that the sharp rebound in spending in some parts of the economy could mean unemployment will fall back from its peak more quickly this time. However, according to the Post’s authors, uncertainty over COVID-19 and mismatches between jobs and job seekers may slow hiring.

UK Financial Conduct Authority

FCA Announces Program Designed to Assist Companies Tackle COVID-19 Challenges

October 5, 2020

The UK Financial Conduct Authority announced it has opened application windows for two ‘sandbox’ services – Cohort 7 of the Regulatory Sandbox and the pilot of a new Digital Sandbox initiative – designed to support innovative firms tackle challenges caused by the COVID-19 pandemic.