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Top Story Lending Related


Regulator actions to support household lending

The Fed, FDIC, and OCC have issued a joint press release announcing the following two actions to support the U.S. economy and allow banks to continue lending to households and businesses:

  • A statement encouraging banks to use their resources to support households and businesses; and
  • A technical change to phase in gradually, as intended, the automatic distribution restrictions if a firm's capital levels decline.

The technical rule will be effective upon publication. Issued as an interim final rule, it will have a 45-day comment period. UPDATE: Published at 85 FR 15909 on 3/20/20, with a comment period ending 5/4/20.


Discount rate decreases

The Federal Reserve Board has approved action on Sunday by the Board of Directors of the Federal Reserve Bank of Kansas City and actions on Monday by the Boards of Directors of the Federal Reserve Banks of Boston, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Dallas, and San Francisco, decreasing the discount rate (the primary credit rate) at the Banks from 1-3/4 percent to 1/4 percent, effective immediately.


Fed revises internal appeals and ombudsman policies

The Board of Governors of the Federal Reserve System has published [85 FR 15175] a final policy revising its internal appeals process for institutions wishing to appeal an adverse material supervisory determination and its policy regarding the Ombudsman for the Federal Reserve System. The final appeals process will apply to all material supervisory determination appeals initiated after the effective date, which is April 1, 2020.


Agencies encourage use of Fed's discount window

The Federal Reserve Board, FDIC and OCC issued a joint press release Monday, with a statement encouraging banks to use the Federal Reserve's discount window so that they can continue supporting households and businesses.


Bureau updates HMDA FAQs

The CFPB has published a response to a frequently asked HMDA question: If a natural person applicant submits a mail, internet, or telephone application under Regulation C but does not provide race, ethnicity, or sex information, what should the financial institution report regarding whether this information was collected on the basis of visual observation or surname? It's question 7 in the "Ethnicity, Race, and Sex" group on the Bureau's HMDA FAQs.

The Bureau's answer?—If the financial institution doesn't have an opportunity to collect this information during an in-person meeting in the application process, the financial institution may report either that the information was not collected on the basis of visual observation (code 2) or that the requirement to report this data field is not applicable (code 3). For consistency of data across all reporters, the CFPB suggests (but doesn't require) that code 2 be used.


OCC and FDIC urge banks to meet customer needs during crisis

OCC Bulletin 2020-15 and FDIC FIL-17-2020 urge OCC- and FDIC-supervised institutions to meet the financial services needs of their customers adversely affected by COVID-19-related issues.


Homeless programs receive $118M from HUD

HUD Secretary Carson announced on Friday over $118 million in grants to support local homeless assistance programs across the country. The HUD Continuum of Care grants will provide critically needed support to approximately 630 local programs on the front lines, serving individuals and families experiencing homelessness.


Fed acts in rare Sunday meetings to lower rates and support credit

The Federal Reserve Board has released a Federal Open Market Committee Statement following an extraordinary Sunday meeting, to announce the Committee's decision to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee "expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective."

The announcement also said that to "support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. The Committee will also reinvest all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Open Market Desk has recently expanded its overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions and is prepared to adjust its plans as appropriate."

The implementation note issued with the Fed's announcement reports the the Board of Governors voted unanimously to set the interest rate paid on required and excess reserves at 0.10 percent effective March 16, and to approve a 1-1/2 percentage point decease in the primary credit rate at Federal Reserve Banks to 0.25 percent, also effective March 16. Banks will be able to borrow from the Fed's discount window for periods up to 90 days.

In addition, in a press release concerning the Federal Reserve's actions to support the flow of credit to households and businesses, the Board of Governors announced that, beginning with next reserve maintenance period on March 26, reserve requirements will be eliminated for thousands of depository institutions to help support lending to households and businesses.

UPDATE: The Board published amendments to Regulation A [85 FR 16526] and Regulation D [85 FR 16526—Interest on reserves] and [a href="">85 FR 16525—lowering reserve ratios on transaction accounts] on March 24, 2020.


SBA amends loan program rules

The Small Business Administration has published a final rule [85 FR 14772] amending its business loan program regulations (13 CFR parts 120 and 134) to implement the Small Business 7(a) Lending Oversight Reform Act of 2018 and make other amendments that will strengthen SBA's lender oversight and ensure the integrity of the business loan programs. The key amendments in this rule codify SBA's informal enforcement actions, new civil monetary penalties and certain appeal rights for 7(a) Lenders, clarify certain enforcement actions for Microloan Intermediaries, and adopt statutory changes to the credit elsewhere test. The rule also makes other technical amendments, updates, and conforming changes including clarifying oversight and enforcement related definitions.

The amendments will become effective April 15, 2020.


OCC revises Deposit-Related Credit booklet

OCC Bulletin 2020-14, issued yesterday, announces a full revision of the "Deposit Related Credit" booklet of the Comptroller's Handbook, which is prepared for use by OCC examiners in connection with the examination and supervision of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.

Version 3.0 of the booklet replaces the booklet of the same title and rescinds OCC Bulletin 2018-28, “Deposit-Related Credit: Updated Comptroller’s Handbook Booklet,” which transmitted version 2.1 of the booklet in September 2018. The newest version:

  • reflects relevant OCC issuances published since this booklet was last issued
  • reflects changes to laws and regulations that occurred since this booklet was last issued
  • clarifies applicability of references to covered savings associations
  • includes clarifying edits regarding supervisory guidance, sound risk management practices, or legal language
  • revises certain content for general clarity


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