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Daily Financial Regulation Update -- Saturday, December 18, 2021

December 18, 2021

By FedACTion Task Force

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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 the full text of the Consolidated Appropriations Act, 2021, Enacted December 27, 2020.

Click here to view the full text of the American Rescue Plan of 2021, Enacted March 11, 2021.

Click here to view the full text of the PPP Extension Act of 2021, Enacted March 30, 2021.

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

U.S. Department of the Treasury

Joint Statement: UK-U.S. Financial Regulatory Working Group

December 17, 2021

UK and U.S. participants held the fifth meeting of the UK-U.S. Financial Regulatory Working Group (Working Group) on December 15, 2021. The Working Group was formed in 2018 to deepen bilateral regulatory cooperation with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation in both jurisdictions.

Federal Reserve Board

Federal Deposit Insurance Corporation

Office of the Comptroller of the Currency

Letter: Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations

December 17, 2021

The Federal Reserve Board (Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) issued an interagency statement to explain that the federal banking agencies will continue to exercise discretion to not take enforcement action against either an asset manager that is a principal shareholder of a bank, or a bank for which an asset manager is a principal shareholder, with respect to extensions of credit by the bank to the related interests of such asset manager that otherwise would violate Regulation O.

Federal Reserve Board

Letter: Revised Home Mortgage Disclosure Act Examination Procedures

December 17, 2021

The Federal Reserve revised Home Mortgage Disclosure Act (HMDA) examination procedures. These procedures are for use in connection with HMDA data collected since January 1, 2018 pursuant to the Consumer Financial Protection Bureau's October 15, 2015 and August 24, 2017 amendments to Regulation C, which implements HMDA, and the Economic Growth, Regulatory Relief, and Consumer Protection Act's May 24, 2018 amendments to HMDA.

Paper: Corporate Taxes and the Earnings Distribution: Effects of the Domestic Production Activities Deduction

December 17, 2021

The Federal Reserve Board published a staff working paper titled, "Corporate Taxes and the Earnings Distribution: Effects of the Domestic Production Activities Deduction."

Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program

December 17, 2021

The Federal Reserve Board published a staff working paper titled, "Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program."

Recourse as Shadow Equity: Evidence from Commercial Real Estate Loans

December 17, 2021

The Federal Reserve Board published a staff working paper titled, "Recourse as Shadow Equity: Evidence from Commercial Real Estate Loans."

Equilibrium Unemployment: The Role of Discrimination

December 17, 2021

The Federal Reserve Board published a staff working paper titled, "Equilibrium Unemployment: The Role of Discrimination."

Speech: A Hopeless and Imperative Endeavor: Lessons from the Pandemic for Economic Forecasters

December 17, 2021

Federal Reserve Board Governor Christopher J. Waller gave a speech titled, "A Hopeless and Imperative Endeavor: Lessons from the Pandemic for Economic Forecasters."

Federal Reserve Bank of New York

Corporate Credit Facilities' Final Distribution of Assets and SPV Termination

December 17, 2021

The final distributions of assets of the special purpose vehicle established in connection with the Primary Market Corporate Credit Facility (PMCCF) and Secondary Market Corporate Credit Facility (SMCCF) took place in installments on November 19 and December 14, 2021, with a total distribution of about $514.5 million. In accordance with the vehicle's limited liability company agreement, 90% of that total distribution was sent to the U.S. Department of the Treasury (about $463.1 million) and 10% to the Federal Reserve Bank of New York (about $51.4 million). A summary of the amounts distributed to the Treasury and New York Fed is here. The special purpose vehicle - the Corporate Credit Facilities LLC - was terminated.

U.S. Economy in a Snapshot

December 17, 2021

The Federal Reserve Bank of New York published its monthly U.S. Economy in a Snapshot. The unemployment rate fell, consumer spending on durable goods picked up, and inflation remained elevated.

Underlying Inflation Gauge (UIG)

December 17, 2021

The Underlying Inflation Gauge "full data set" measure for November is currently estimated at 4.4%, a 0.1 percentage point increase from the previous month.

Report: Subsidizing Startups under Imperfect Information

December 17, 2021

The Federal Reserve Bank of New York published a report titled, ""Subsidizing Startups under Imperfect Information."

Report: Repo over the Financial Crisis

December 17, 2021

The Federal Reserve Bank of New York published a report titled, "Repo over the Financial Crisis."

Blog Post: A New Tool for Tracking Regional Employment Trends

December 17, 2021

The Federal Reserve Bank of New York (New York Fed) published a Liberty Streets Economics blog post titled, "A New Tool for Tracking Regional Employment Trends." The New York Fed has launched a regional employment web interactive that gives users a convenient place to measure and analyze employment trends for more than twenty geographies in the Federal Reserve's Second District. The new interactive illustrates regional employment trends for states and metropolitan areas within the region, from the year 2000 to the latest available month.

Federal Reserve Bank of Boston

Paper: The Valuation Effects of Trade

December 17, 2021

The Federal Reserve Bank of Boston published a paper titled, "The Valuation Effects of Trade."

Paper: The Transmission Mechanisms of International Business Cycles: Output Spillovers through Trade and Financial Linkages

December 17, 2021

The Federal Reserve Bank of Boston published a paper titled, "The Transmission Mechanisms of International Business Cycles: Output Spillovers through Trade and Financial Linkages."

Paper: High-Frequency Spending Responses to Government Transfer Payments

December 17, 2021

The Federal Reserve Bank of Boston published a paper titled, "High-Frequency Spending Responses to Government Transfer Payments."

Paper: Has COVID Changed Consumer Payment Behavior?

December 17, 2021

The Federal Reserve Bank of Boston published a paper titled, "Has COVID-19 Changed Consumer Payment Behavior?"

Federal Deposit Insurance Corporation

New Reports Highlight the Performance of Commercial Real Estate Sectors and Bank Credit Quality in the Pandemic and the Benefits and Challenges of Increased Liquidity From Record Deposit Growth in the Banking Industry

December 17, 2021

Federal Deposit Insurance Corporation-insured institutions reported aggregate net income of $69.5 billion in third quarter 2021, an increase of $18.4 billion (35.9%) from the same quarter a year ago, primarily due to a $19.7 billion decline in provision expense.

Technical Assistance Videos on the Mortgage Servicing Rules

December 17, 2021

The Federal Deposit Insurance Corporation (FDIC) updated the technical assistance videos on the mortgage servicing rules. The information in the five videos is intended as a high-level overview to help FDIC-supervised institutions understand and comply with the mortgage servicing rules.

Office of the Comptroller of the Currency

Home Mortgage Disclosure Act: Interagency Examination Procedures

December 17, 2021

The Office of the Comptroller of the Currency (OCC) issued the revised interagency Home Mortgage Disclosure Act examination procedures for determining compliance with HMDA and its implementing regulations.

Financial Stability Oversight Council

Report: Financial Stability Oversight Council Releases 2021 Annual Report

December 17, 2021

The Financial Stability Oversight Council (FSOC) unanimously approved its 2021 annual report. This year's report describes activities of the Council over the past year, as the U.S. economy has continued to rebound from the disruptions caused by the COVID-19 pandemic.

International

European Commission

Report: European Structural and Investment Funds Have European Added Value By Supporting Investment and Helping Companies, Workers and Citizens in Coping with the COVID-19 Pandemic

December 17, 2021

The European Commission has published the 2021 Summary Report on the Implementation of the European Structural and Investment Funds (ESI Funds). The report presents the cumulative achievements of the ESI Funds for the 2014-2020 period by the end of 2020.

European Banking Authority

EBA Proposes Amendments to Technical Standards on the Mapping of ECAIs for Securitization Positions

December 17, 2021

The European Banking Authority launched a public consultation to amend the Implementing Regulation on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for securitization.

EBA Consults on Amending Technical Standards on Benchmarking of Internal Models

December 17, 2021

The European Banking Authority launched a consultation on the amendment of the Implementing Regulation for the 2023 benchmarking of internal approaches used in credit risk and market risk.

Report: EBA Confirms EU Banks' Solid Overall Liquidity Position but Warns about Low Foreign Currency Liquidity Buffers

December 17, 2021

The European Banking Authority (EBA) published its EBA Report on liquidity measures, which monitors and evaluates the liquidity coverage requirements currently in place in the EU. The liquidity coverage ratio (LCR) of EU banks stood at 176% in June 2021, materially above the minimum threshold of 100%. At the same time, the EBA renews its concern of EU banks' low foreign currency LCR values and encourages banks and supervisors to work towards improving the situation.

EBA Publishes Final Guidelines on the Delineation and Reporting of Available Financial Means of Deposit Guarantee Schemes

December 17, 2021

The European Banking Authority (EBA) published its Final Guidelines on the delineation and reporting of available financial means of DGSs. The purpose of the Guidelines is to ensure that only funds that credit institutions originally contributed to a DGS fund, or that stem indirectly from such contributions, such as recoveries, will count towards reaching the target level of said DGS fund. Conversely, funds that stem directly or indirectly from borrowed resources should not count towards the target level. These clarifications aim at preventing a situation whereby a DGS could meet the target level by taking out a loan, instead of raising contributions from the industry.

EBA Will Run its Next EU-wide Stress Test in 2023

December 17, 2021

On December 8, 2021, the Board of Supervisors of the European Banking Authority (EBA) decided to carry out its next EU-wide stress test in 2023. This is in line with the decision to aim for a biennial exercise. This decision has been communicated to the European Parliament, the Council, and the Commission. In 2022, the EBA will perform its regular annual transparency exercise.

Bank of England

Blog Post: Why Are Interest Rates in the UK Going Up?

December 17, 2021

The Bank of England published a KnowledgeBank blog post titled, "Why Are Interest Rates in the UK Going Up?"

Paper: The Repo Market under Basel III

December 17, 2021

The Bank of England published a paper titled, "The Repo Market under Basel III."

Paper: Capital Allocation, the Leverage Ratio Requirement and Banks' Risk-taking

December 17, 2021

The Bank of England published a paper titled, "Capital Allocation, the Leverage Ratio Requirement and Banks' Risk-taking."

Paper: Non-standard Errors

December 17, 2021

The Bank of England published a paper titled, "Non-standard Errors."

Paper: The Importance of Supply and Demand for Oil Prices: Evidence from Non-Gaussianity

December 17, 2021

The Bank of England published a paper titled, "The Importance of Supply and Demand for Oil Prices: Evidence from Non-Gaussianity."

Bank of England Prudential Regulation Authority

PS28/21 | CP18/21 – Remuneration: Identification of Material Risk Takers

December 17, 2021

The Bank of England published Prudential Regulation Authority Policy Statement 28/21, providing feedback to responses to Consultation Paper 18/21 "Remuneration: Identification of material risk takers."

PS29/21 | CP11/21 – Review of Solvency II: Reporting (Phase 1)

December 17, 2021

The Bank of England published Prudential Regulation Authority Policy Statement 29/21, providing feedback to responses to Consultation Paper (CP) 11/21 "Review of Solvency II: Reporting."

UK Financial Conduct Authority

FCA's new rules on climate-related disclosures to help investors, clients and consumers

December 17, 2021

The FCA has published two Policy Statements confirming final rules and guidance to promote better climate-related financial disclosures.

Administration Changes

Appointments/Confirmation Hearings

U.S. Department of the Treasury - Janet Yellen (effective January 26, 2021)

Federal Reserve Board

Consumer Financial Protection Bureau - Rohit Chopra (effective October 12, 2021)

Securities and Exchange Commission - Gary Gensler (effective April 17, 2021)

Small Business Administration - Isabella Casillas Guzman (effective March 16, 2021)

Commodity Futures Trade Commission – Rostin Behnam (effective December 17, 2021)

Financial Crimes Enforcement Network

National Credit Union Administration - Todd M. Harper

U.S. Department of Housing and Urban Development - Marcia Fudge (effective March 10, 2021)

Federal Housing Finance Agency – Sandra L. Thompson

U.S. Department of Education - Dr. Miguel Cardona (effective March 2, 2021)

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