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PH FedACTion: Financial Regulatory Updates

Daily Financial Regulation Update - Wednesday, June 17, 2020

June 17, 2020

FedACTion Task Force

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Major Developments

FDIC Releases Quarterly Banking Profile

June 16, 2020

The Federal Deposit Insurance Corporation (FDIC) released its Quarterly Banking Profile (Profile) for the first quarter of 2020. The findings of the Profile included that, for the 5,116 FDIC-insured commercial banks and savings institutions, aggregate net income totaled $18.5 billion in the first quarter of 2020, a decline of $42.2 billion (69.6%) from a year ago; but, that loan and lease balances registered strong growth on a quarterly and annual basis, and, that asset quality metrics remained relatively stable.


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.

U.S. Senate

Committee on Banking, Housing, and Urban Affairs

Senators Crapo, Brown Deliver Statements on Federal Reserve’s Semiannual Monetary Policy Report

June 16, 2020

U.S. Senator Mike Crapo (R-Idaho), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs (Committee), and U.S. Senator Sherrod Brown (D-OH), Ranking Member of the Committee, delivered statements at the Committee’s virtual hearing on the Federal Reserve’s semiannual Monetary Policy Report. In Senator Crapo’s statement, he noted that “[t]he (Federal Reserve) has set up facilities funded both under and outside of the CARES Act, and there is evidence that the mere announcement of some of those facilities have had a positive and stabilizing effect on markets, even before becoming operational”. In Senator Brown’s statement, he asserted that “while the (U.S.) Treasury and (Federal Reserve) are helping financial markets and corporations, you are not holding up the other end of the deal—we also asked you to make sure that working Americans remained employed and safe.”

Federal Agencies

Federal Reserve Board

Powell Presents Federal Reserve’s Semiannual Monetary Policy Report

June 16, 2020

Jerome H. Powell, Chair of the Federal Reserve, presented the Federal Reserve’s semiannual Monetary Policy Report in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, addressing, among other things, the impact of COVID-19 on the economy.

Clarida Delivers Speech to Foreign Policy Association

June 16, 2020

Richard H. Clarida, Vice Chair of the Federal Reserve, delivered a speech entitled “U.S. Economic Outlook and Monetary Policy” at a Foreign Policy Association (FPA) virtual meeting. In his speech, Clarida stated that “[t]he coronavirus pandemic poses the most serious threat to maximum employment and, potentially, to price stability that the United States has faced in our lifetimes”, but that the “Federal Reserve will continue to act forcefully, proactively, and aggressively as we deploy our toolkit—including our balance sheet, forward guidance, and lending facilities—to provide critical support to the economy during this challenging time and to do all we can to make sure that the recovery from this downturn, once it commences, is as robust as possible.”

Federal Reserve Bank of New York

New York Fed Releases June 2020 Business Leaders Survey

June 16, 2020

The Federal Reserve Bank of New York (New York Fed) released its Business Leaders Survey (Survey) for the month of June, 2020. According to the Survey, activity in the region’s service sector continued to decline significantly, though at a slower pace than in April and May, 2020 due to COVID-19. The Survey’s headline business activity index climbed 36 points to -40.0. The Survey’s business climate index rose 11 points, but at -82.3, indicated that the vast majority of firms still viewed the business climate as worse than normal. Further, according to the Survey, employment levels and wages continued to decline, though not as much as in the previous month; input price increases picked up, while selling prices continued to fall; and, capital spending continued to decline significantly. Looking ahead, for the first time since the pandemic began, the Survey found that firms expected conditions to be better in the coming months.

New York Fed Publishes Blog Post on Outflows from Bank-Loan Funds

June 16, 2020

The Federal Reserve Bank of New York (New York Fed) published a blog post (Post) entitled “Outflows from Bank-Loan Funds during COVID-19”. In the Post, the authors, Nicola Cetorelli, Gabriele La Spada, and João Santos, purported to show that “the flow sensitivity of the loan-fund industry to the COVID-19 crisis (and to negative shocks more generally) seems to be even greater than that of high-yield bond funds, which also invest in high-risk debt securities and have received much attention because of their possible exposure to run-like behavior by investors and their implications for financial stability.”

New York Fed Publishes Blog Post on Signs of Regional Economic Improvement

June 16, 2020

The Federal Reserve Bank of New York (New York Fed) published a blog post (Post) entitled “Finally, Some Signs of Improvement in the Regional Economy”. In the Post, the authors, Jaison R. Abel, Jason Bram, Richard Deitz, and Benjamin G. Hyman, wrote that “[f]ollowing two months of unprecedented decline due to the coronavirus pandemic, indicators of business activity point to a slower pace of contraction in the service sector and signs of a rebound in the manufacturing sector”, and, “as the regional economy has begun to reopen, many businesses have started to recall workers who were laid off or put on furlough since the start of the pandemic”, and “[s]ome have even hired new workers.”

Office of the Comptroller of the Currency

OCC Reports Mortgage Performance Remains Stable

June 16, 2020

The Office of the Comptroller of the Currency (OCC) reported the performance of first-lien mortgages in the federal banking system remained stable during the first quarter of 2020, coinciding with the pandemic.

Consumer Financial Protection Bureau

CFPB Issues Guidance on CARES Act Credit Reporting

June 16, 2020

The Consumer Financial Protection Bureau issued guidance on consumer reporting during the COVID-19 pandemic by releasing new Frequently Asked Questions (FAQs) on credit reporting. The FAQs address, among other things, the credit reporting requirements of the CARES Act, including considerations for furnishers when reporting consumers as current as required by the CARES Act.

Federal Housing Finance Agency

FHFA Makes Translated COVID-19 Resources Available in Six Languages

June 16, 2020

To assist borrowers with limited English proficiency who are experiencing mortgage-related difficulties due to COVID-19, the Federal Housing Finance Agency, in coordination with Fannie Mae and Freddie Mac, added new translations to its Mortgage Translations website. Site visitors can now choose English, Spanish, traditional Chinese, Vietnamese, Korean, or Tagalog when accessing scripts that servicers use when discussing COVID-19 forbearance with borrowers. The revised Mortgage Assistance Application is also available in the same six languages.

Freddie Mac

Freddie Mac Issues Quarterly Forecast

June 16, 2020

Freddie Mac released its Quarterly Forecast (Forecast), which shows that housing markets have been affected by COVID-19, with both home sales and house price growth declining. According to the Forecast, the average 30-year fixed-rate mortgage is expected to be 3.4% in 2020 and 3.2% in 2021; house price growth is expected to decelerate to an annual rate of 2.3% in 2020; in 2021, that rate is expected to be 0.4%; home sales are expected to decrease in 2020 to 4.8 million homes and increase in 2021 to 5.6 million homes; purchase originations are expected to decrease to $1.044 trillion in 2020 and increase to $1.244 trillion in 2021; and, refinance originations are expected to be $1.872 trillion in 2020 before falling to $1.279 trillion in 2021. Overall, the Forecast expects annual mortgage origination levels to be $2.916 trillion in 2020 and $2.524 trillion 2021.

State Agencies

New York State Department of Financial Services

New York DFS Extends COVID-19 Regulatory Relief for New York-Regulated Mortgage Servicers

June 15, 2020

The New York State Department of Financial Services (DFS) published a Department Order to extend regulatory relief to New York-regulated mortgage servicers. The Department Order grants New York-regulated mortgage servicers a 60-day extension, from June 15th, 2020 to August 14th, 2020, to comply with the periodic statement requirements which became effective on June 15, 2020. The Department Order requires New York-regulated mortgage servicers that are unable to comply starting June 15, 2020 to post a notice on their website that borrowers are entitled to receive these periodic statements on or shortly after August 14, 2020.

UK Financial Conduct Authority

FCA Issues Statement on FCA’s and PSR’s Joint Approach to Access to Cash

June 16, 2020

The UK Financial Conduct Authority (FCA) issued a Statement regarding the FCA’s and Payment Systems Regulator’s (PSR) joint approach to access to cash. In the Statement, the FCA outlined the steps it and other entities, including the PSR, have taken to address the impact of COVID-19 on consumers’ access to cash.

Randell Delivers Speech to Virtual Roundtable

June 16, 2020

Charles Randell, Chair of the UK Financial Conduct Authority and Payment Systems Regulator, delivered a speech entitled “A Financial System to Support the Recovery” to a virtual roundtable of bank chairs hosted by UK Finance.

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