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Daily Financial Regulation Update -- Thursday, April 1, 2021

April 01, 2021

By Paul Hastings Professional

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Administration Changes

Appointments/Confirmation Hearings

Department of the Treasury – Janet Yellen (effective January 26, 2021)

Consumer Financial Protection Bureau – Rohit Chopra (Nominee)

Securities and Exchange Commission – Gary Gensler (Nominee)

Small Business Administration – Isabel Guzman (effective March 16, 2021)

Commodity Futures Trade Commission

National Credit Union Administration – Todd M. Harper

Department of Housing and Urban Development – Marcia Fudge (effective March 10, 2021)

Department of Education – Dr. Miguel Cardona (effective March 2, 2011)

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.

U.S. House of Representatives

Committee on Financial Services

Chairwoman Waters Announces April Hearing Schedule

March 31, 2021

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, announced the hearing schedule for the month of April, including a hearing on April 15, 2021 entitled “Banking Innovation or Regulatory Evasion? Exploring Trends in Financial Institution Charters.”

Federal Agencies

U.S. Department of the Treasury

Secretary of the Treasury Janet L. Yellen on Women's History Month

March 31, 2021

Department of the Treasury (Treasury) Janet L. Yellen released a letter to Treasury staff on the end of Women’s History Month.

Federal Reserve Board

Federal Reserve Board Publishes FAQs Comprising Existing Legal Interpretations Related to a Number of the Board’s Longstanding Regulations

March 31, 2021

The Board of Governors of the Federal Reserve System (Federal Reserve Board) published frequently asked questions (FAQs) comprising existing legal interpretations related to a number of the Fed’s longstanding regulations, including:

  • Regulation H (Membership of State Banking Institutions in the Federal Reserve System);
  • Regulation K (International Banking Operations);
  • Regulation L (Management Official Interlocks);
  • Regulation O (Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks);
  • Regulation W (Transactions with Affiliates); and
  • Regulation Y (Bank Holding Companies and Change in Bank Control.
  • Legal Interpretations FAQs
  • News Release

Federal Reserve Board Adopts Final Rule Outlining and Confirming the Use of Supervisory Guidance for Regulated Institutions

March 31, 2021

The Board of Governors of the Federal Reserve System adopted a final rule outlining and confirming the use of supervisory guidance for regulated institutions. The final rule generally codifies a statement issued in September 2018 clarifying the differences between regulations and guidance and is substantially similar to the proposal issued last year and is consistent with regulations promulgated by the other federal bank regulatory agencies.

Fundamental Arbitrage under the Microscope: Evidence from Detailed Hedge Fund Transaction Data

March 31, 2021

The Divisions of Research & Statistics and Monetary Affairs of the Federal Reserve Board released a paper titled “Fundamental Arbitrage under the Microscope: Evidence from Detailed Hedge Fund Transaction Data,” as part of its Finance and Economics Discussion Series.

Federal Reserve Bank of New York

The New York Fed DSGE Model Forecast—March 2021

March 31, 2021

The Federal Reserve Bank of New York’s Liberty Street Economics blog released a post titled “The New York Fed DSGE Model Forecast – March 2021.”

Primary Dealer Credit Facility Expires

March 31, 2021

The Federal Reserve Bank of New York released an announcement that, in line with an earlier announcement by the Board of Governors of the Federal Reserve System, the Primary Dealer Credit Facility expired and ceased extending new loans as of March 31, 2021.

Commercial Paper Funding Facility Expires

March 31, 2021

The Federal Reserve Bank of New York released an announcement that, in line with an earlier announcement by the Board of Governors of the Federal Reserve System, the Commercial Paper Funding Facility expired and ceased purchasing eligible commercial paper as of March 31, 2021.

Federal Deposit Insurance Corporation

FDIC Launches Brokered Deposit Rule Website as Revised Brokered Deposit Regulations Take Effect

March 31, 2021

The Federal Deposit Insurance Corporation announced it is adding a brokered deposits webpage to the Banker Resource Center to provide information about the final rule, including filing instructions for the notice and application process under the final rule effective April 1, 2021. The full compliance date with respect to the revised brokered deposit revisions is January 1, 2022.

FDIC Consumer Compliance Supervisory Highlights

March 31, 2021

The Federal Deposit Insurance Corporation (FDIC) issued the March 2021 edition of the Consumer Compliance Supervisory Highlights. The edition includes a summary of the FDIC’s supervisory approach in response to COVID-19, supervisory observations related to consumer protection laws, examples of practices that may be useful in mitigating risks, regulatory developments, and consumer compliance resources.

U.S. Securities and Exchange Commission

Staff Statement on Select Issues Pertaining to Special Purpose Acquisition Companies

March 31, 2021

The Securities and Exchange Commission issued a staff statement addressing certain accounting, financial reporting and governance issues that should be carefully considered before a private operating company undertakes a business combination with a special purpose acquisition company or SPAC, including (i) shell company restrictions, (ii) books and records and internal controls requirements and (iii) initial listing standards on national securities exchanges.

Financial Reporting and Auditing Considerations of Companies Merging with SPACs

March 31, 2021

Paul Munter, Acting Chief Accountant of the Securities and Exchange Commission, issued a statement titled “Financial Reporting and Auditing Considerations of Companies Merging with SPACs.”

Opening Remarks at the Diversifying Opportunity in Venture Capital Series

March 31, 2021

Martha Miller, Advocate for Small Business Capital Formation at the Securities and Exchange Commission, gave opening remarks at the Diversifying Opportunity in Venture Capital Series.

Consumer Financial Protection Bureau

CFPB Rescinds Series of Policy Statements to Ensure Industry Complies With Consumer Protection Laws

March 31, 2021

The Consumer Financial Protection Bureau (CFPB) announced it is rescinding seven policy statements issued last year that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. The seven rescissions, effective April 1, 2021, provide guidance to financial institutions on complying with their legal and regulatory obligations. With the rescissions, the CFPB is providing notice that it intends to exercise the full scope of the supervisory and enforcement authority provided under the Dodd-Frank Act. The CFPB is also rescinding its 2018 bulletin on supervisory communications and replacing it with a revised bulletin describing its use of matters requiring attention to effectively convey supervisory expectations.

FY 2020 Office of Minority and Women Inclusion (OMWI) Annual Report to Congress

March 31, 2021

The Consumer Financial Protection Bureau (CFPB) released its Fiscal Year 2020 Office of Minority and Women Inclusion annual report to Congress, which provides detailed information about the diversity and inclusion work of the CFPB from October 1, 2019 through September 30, 2020.

2020 HMDA Data on Mortgage Lending Now Available

March 31, 2021

The Consumer Financial Protection Bureau issued a release titled “2020 HMDA Data on Mortgage Lending Now Available.” According to the release, Home Mortgage Disclosure Act (HMDA) Modified Loan Application Register data for 2020 were published on the Federal Financial Institutions Examination Council’s HMDA Platform for approximately 4,400 HMDA filers. The published data contain loan-level information filed by financial institutions, modified to protect privacy.

Financial Stability Oversight Council

Financial Stability Oversight Council Hosts Open Meeting

March 31, 2021

The Financial Stability Oversight Council hosted on an open meeting on March 31, 2021.

Federal Housing Finance Agency

FHFA’s Office of Minority and Women Inclusion (OMWI) Issues 2020 Annual Report to Congress

March 31, 2021

The Federal Housing Finance Agency released its 2020 Office of Minority and Women Inclusion annual report to Congress.

Freddie Mac

Freddie Mac Multifamily Analysis Shows Impact of Expanded Benefits on Unemployed Renters during COVID-19

March 31, 2021

A new analysis from Freddie Mac Multifamily examines how expanded unemployment benefits and federal stimulus payments affected unemployed renters’ income during COVID-19 and its potential impact on the ability to pay rent.

Ginnie Mae

Extension of Temporary Relief from the Acceptable Delinquency Threshold Requirement

March 31, 2021

Ginne Mae released an All Participant Memorandum (APM) titled “Extension of Temporary Relief from the Acceptable Delinquency Threshold Requirement.” According to the release, due to the continuing impact of the COVID-19 pandemic on forbearance levels and delinquency rates, Ginnie Mae is further extending the exemptions that were announced in the APM titled “Treatment of Mortgage Delinquency Ratios for Issuers Affected by COVID-19” and extended in the APM titled “Extension of Temporary Relief from the Acceptable Delinquency Threshold Requirement” from July 31, 2021 through January 31, 2022.

International

European Banking Authority

EU Financial Regulators Warn of an Expected Deterioration of Asset Quality

March 31, 2021

The three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) issued their first joint risk assessment report of 2021. The report highlights how the COVID-19 pandemic continues to weigh heavily on short-term recovery prospects. It also highlights a number of vulnerabilities in the financial markets and warns of possible further market corrections.

EBA Reviews Final Q&As Against Revised Legislation

March 31, 2021

The European Banking Authority reviewed questions and answers (Q&As) published in its Single Rulebook Q&A tool against the revised Capital Requirements Regulation, Capital Requirements Directive and Bank Recovery and Resolution Directive. The published Q&As were updated in line with the revised legal acts, and the outcome has been reflected in the Q&A tool.

EBA Launched Public Consultation on Regulatory Technical Standards on Disclosure of Investment Policy by Investment Firms

March 31, 2021

The European Banking Authority published a consultation paper on draft regulatory technical standards (RTS) on disclosure of investment policy by investment firms. The draft RTS put forward comparable disclosures that should help stakeholders understand investment firms’ influence over the companies in which they have voting rights and the impact of investment firms’ policies on aspects such as the governance or management of those companies.

The European Supervisory Authorities Issue a Report on the Application of Their Guidelines on Complaints-Handling

March 31, 2021

The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA - ESAs) published a Report on the application of their Guidelines on complaints-handling. The Report concludes that the Guidelines have contributed to a consistent approach to complaints-handling across the banking, insurance and securities sectors and have resulted in better outcomes for consumers.

EBA Points to a Rising Share of Loans that Show a Significant Increase in Credit Risk (Stage 2 Loans)

March 31, 2021

The European Banking Authority published its Risk Dashboard for the last quarter of 2020. The data show a rise in capital ratios, a contraction of the nonperforming loan ratio and a return on equity significantly below banks’ cost of equity. Aside from asset quality and profitability, operational risks remain a key concern going forward.

Future Consultation on Strengthening Investor Protections in Special Purpose Acquisition Companies (SPACs)

March 31, 2021

The Financial Conduct Authority confirmed that it will be consulting soon on amendments to its Listing Rules and related guidance to strengthen protections for investors in special purpose acquisition companies or SPACs. The consultation will consider the structural features and enhanced disclosure, including a minimum market capitalization and a redemption option for investors, required to provide appropriate investor protection.