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The Federal Institutions Examination Council has announced the availability of two FFIEC federal disclosure computational tools: the Annual Percentage Rate (APR) Computational Tool and the Annual Percentage Yield (APY) Computational Tool. These web-based tools facilitate supervision of financial institutions with regard to applicable laws and regulations and assist financial institutions in their efforts to comply with those laws and regulations. The OCC has discontinued use of its Annual Percentage Rate Calculation Program for Windows (APRWIN) and Annual Percentage Yield Calculation Program for Windows (APYWIN) in favor of the FFIEC Federal Disclosure Computational Tools. The OCC's APRWIN and APYWIN are no longer available for download.

The FDIC, Fed, OCC, and NCUA will host a webinar for bankers on Friday, April 24, 2020, from 3:00 to 4:00 p.m. EDT, to discuss the revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. The webinar will address accounting and regulatory reporting questions and clarify the interaction between current accounting principles and Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

The webinar topics will include:

• Clarifying the interaction between current accounting principles and Section 4013 of the CARES Act;
• Supervisory considerations on past-due and nonaccrual regulatory reporting; and
• Regulatory capital considerations.

Participants should preregister for the event. To accommodate the participation of as many financial institutions as possible, the agencies ask that each institution register no more than two representatives to attend the live session. Participants are encouraged to email questions in advance to askthereregulators@stis.frb.org. Webinar materials will be archived for future viewing and can be accessed after the webinar at the registration link.

• FDIC FIL-46-2020

The FDIC has announced it will temporarily postpone its efforts to modify its signage and advertising requirements. The agency remains committed to modernizing these rules at a future date to better reflect how banks and savings associations are transforming their business models to take deposits via physical branches, digital, and mobile banking channels.

The Consumer Financial Protection Bureau has announced a final rule raising the loan-volume coverage thresholds for financial institutions reporting data under the Home Mortgage Reporting Act (HMDA).

The final rule, amending Regulation C, increases the permanent threshold for collecting and reporting data about closed-end mortgage loans from 25 to 100 loans effective July 1, 2020. The final rule will also amend Regulation C to increase the permanent threshold for collecting and reporting data about open-end lines of credit from 100 to 200, effective January 1, 2022, when the current temporary threshold of 500 of open-end lines of credit expires. In October 2019, the Bureau extended the temporary open-end threshold until January 1, 2022. But for today’s final rule, the open-end threshold would have reverted to 100 open-end lines of credit upon the expiration of the temporary threshold.

An Executive summary of the final rule includes guidance for institutions transitioning from being reporting institutions to excluded institutions for closed-end mortgage loans effective July 1, 2020.

The final rule was published at 85 FR 28364 on May 12, 2020.

OFAC has posted a notice that the U.S. Departments of State, Homeland Security, and Treasury, and the Federal Bureau of Investigation issued a DPRK Cyber Threat Advisory​ to raise the awareness of the cyber threat posed by North Korea. The advisory highlights North Korea’s malicious cyber activities around the world, identifies U.S. government resources that provide technical and threat information, and includes recommended measures to counter the cyber threat.

The Small Business Administration has reported that it will stop accepting applications for Paycheck Protection Program loans once the processed loan volume reaches the $349 billion level authorized by the CARES Act. Once that point is reached, the SBA said, lenders will no longer be able to send PPP applications to the SBA's system. Loan applications received by banks but not yet submitted to SBA will not be able to be completed. It is expected that the funds will be exhausted today (Thursday, April 16), perhaps as early as this morning. Additional PPP funds won't be available unless Congress acts to supplement the program.

The SBA has also posted a notice that loan advance funds under the EIDL program have been fully committed, and no further applications under that program can be accepted.

UPDATE: The SBA added a notice to its PPP information page this morning (April 16) that "The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding." We updated the headline for this story accordingly.

FDIC FIL-44-2020 announced Wednesday evening (April 15, 2020) that the Federal Financial Institutions Examination Council (FFIEC) has updated several sections and related examination procedures in the FFIEC Bank Secrecy Act/Anti-Money Laundering Examination Manual. The updated sections provide transparency into the BSA/AML exam process and do not establish new requirements. The changes should not be interpreted as new instructions or as an augmented examination focus.

Many of the revisions are designed to emphasize and enhance the risk-focused approach to BSA/AML supervision. An interagency statement accompanying the FIL provides information on the updated sections, all of which are identified in the April 2020 Update also provided with the FIL. Those sections are identified with an April 2020 date in the table of contents and on the FFIEC BSA/AML InfoBase. Updates to other sections of the Manual will be released in phases later.

Yesterday, Treasury and IRS launched the “Get My Payment” web application. The free app allows taxpayers who filed their tax return in 2018 or 2019 but did not provide their banking information on either return to submit direct deposit information. Once they do, they will get their Economic Impact Payments deposited directly in their bank accounts, instead of waiting for a check to arrive in the mail. “Get My Payment” also allows taxpayers to track the status of their payment. For taxpayers to track the status of their payment, they will need to enter basic information in the “Get My Payment” app:

• Social Security number or Individual Tax ID number
• Date of birth
• Street address and ZIP or Postal Code

Taxpayers who want to add their bank account information to speed receipt of their payment will also need to provide the following additional information:

• Their Adjusted Gross Income from their most recent tax return submitted (either 2019 or 2018)
• The refund or amount owed from their latest filed tax return
• Bank account type, account number and routing number

The Department of Homeland Security (DHS), with the support of the U.S. Department of Agriculture (USDA), has announced a temporary final rule to change certain H-2A requirements to help U.S. agricultural employers avoid disruptions in lawful agricultural-related employment, protect the nation’s food supply chain, and lessen impacts from the coronavirus (COVID-19) public health emergency. These temporary flexibilities will not weaken or eliminate protections for U.S. workers.

The Social Security Administration, Treasury, and the IRS announced yesterday that Supplemental Security Income (SSI) recipients will automatically receive their Economic Impact Payments (EIP) directly to their bank accounts through direct deposit, Direct Express debit card, or by paper check, just as they would normally receive their SSI benefits. Treasury anticipates SSI recipients will receive these automatic payments no later than early May.

SSI recipients who have qualifying children under the age of 17 can use the IRS's Non-Filers: Enter Payment Info Here web portal to enter basic information so they can receive their payments as quickly as possible.

Treasury yesterday released Treasury International Capital (TIC) data for February 2020. The next release, which will report on data for March 2020, is scheduled for May 15, 2020.

• The sum total in February of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of $13.4 billion. Of this, net foreign private outflows were $9.2 billion, and net foreign official outflows were $4.2 billion.
• Foreign residents increased their holdings of long-term U.S. securities in February; net purchases were $35.3 billion. Net purchases by private foreign investors were $14.4 billion, while net purchases by foreign official institutions were $20.9 billion.
• U.S. residents decreased their holdings of long-term foreign securities, with net sales of $14.0 billion.
• Taking into account transactions in both foreign and U.S. securities, net foreign purchases of long-term securities were $49.4 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, overall net foreign purchases of long-term securities are estimated to have been $24.7 billion in February.
• Foreign residents increased their holdings of U.S. Treasury bills by $31.0 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $18.8 billion.
• Banks’ own net dollar-denominated liabilities to foreign residents decreased by $56.9 billion.

The Federal Housing Finance Agency (FHFA) and the Consumer Financial Protection Bureau (CFPB) have announced the Borrower Protection Program, a new joint initiative that enables CFPB and FHFA to share servicing information to protect borrowers during the coronavirus national emergency. Under the program, the CFPB will make complaint information and analytical tools available to FHFA via a secure electronic interface; and FHFA will make available to the Bureau information about forbearances, modifications and other loss mitigation initiatives undertaken by Fannie Mae and Freddie Mac.

The Federal Reserve Board has released the April 15, 2020 Beige Book, which indicates:

• Overall Economic Activity
  Economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19 pandemic. The hardest-hit industries—because of social distancing measures and mandated closures—were leisure and hospitality, and retail aside from essential goods. Most Districts reported declines in manufacturing, but cited significant variation across industries. Producers of food and medical products reported strong demand but faced both production delays, due to infection-prevention measures, and supply chain disruptions. Some other manufacturing industries, such as autos, mostly shut down. The energy sector, suffering from low prices, reduced investment and output. Districts reporting on loan demand said it was high, both from companies accessing credit lines and from households refinancing mortgages. All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months.
• Employment and Wages
  Employment declined in all Districts, steeply in many cases, as the COVID-19 pandemic affected firms in many sectors. Employment cuts were most severe in the retail and leisure and hospitality sectors, where most Districts reported widespread mandatory closures and steep falloffs in demand. Many Districts said severe job cuts were widespread, including the manufacturing and energy sectors. Contacts in several Districts noted they were cutting employment via temporary layoffs and furloughs that they hoped to reverse once business activity resumes. The near-term outlook was for more job cuts in coming months. No District reported upward wage pressures. Most cited general wage softening and salary cuts except for high-demand sectors such as grocery stores that were awarding temporary "hardship" or "appreciation" pay increases.
• Prices
  The general direction of price inflation was down for both selling prices and non-labor input prices, as Districts reported either slowing price growth, flat prices, or modest to moderate declines in prices on balance. These trends were seen as reflecting weaker demand for many goods and services in the wake of the COVID-19 pandemic. Four Districts also reported further declines in energy prices. In contrast, supply chain disruptions and shifts in the composition of demand led to significant price increases for some essential services—such as freight—and some agricultural commodities and consumer goods. While expectations concerning agriculture prices were mixed, the outlook calls for further downward pressure on prices on average.

The Federal Reserve Board has posted G.17 Industrial Production and Capacity Utilization data for March. Total industrial production fell 5.4 percent in March, as the COVID-19 pandemic led many factories to suspend operations late in the month. Manufacturing output fell 6.3 percent; most major industries posted decreases, with the largest decline registered by motor vehicles and parts. The decreases for total industrial production and for manufacturing were their largest since January 1946 and February 1946, respectively [when industry was winding down from World War II production levels]. The indexes for utilities and mining declined 3.9 percent and 2.0 percent, respectively. At 103.7 percent of its 2012 average, the level of total industrial production in March was 5.5 percent lower than a year earlier. Capacity utilization for the industrial sector decreased 4.3 percentage points to 72.7 percent in March, a rate that is 7.1 percentage points below its long-run (1972–2019) average.

A joint press release yesterday from the Federal Reserve, FDIC, OCC, NCUA, and CFPB announced an interim final rule to temporarily defer real estate-related appraisals and evaluations under the interagency appraisal regulations to allow regulated institutions to extend financing to creditworthy households and businesses quickly in the wake of the national emergency declared in connection with COVID-19. In addition, the federal banking agencies, together with NCUA and the Consumer Financial Protection Bureau, in consultation with the Conference of State Bank Supervisors, issued a joint statement to address challenges relating to appraisals and evaluations for real estate-related financial transactions affected by COVID-19.

The interim final rule, to become effective on Federal Register publication, will temporarily defer certain appraisals and evaluations for up to 120 days following closing the residential or commercial real estate loan transactions (other than transactions involving acquisition, development, and construction of real estate). The deferment provisions will expire on December 31, 2020, unless extended by the federal banking agencies. The NCUA will consider a similar proposal on April 16.

The joint statement outlines other flexibilities in industry appraisal standards and in the agencies' appraisal regulations and describes temporary changes to Fannie Mae and Freddie Mac appraisal standards that can assist lenders during the COVID-19 emergency.

OCC Bulletin 2020-38
FDIC FIL-43-2020

UPDATE: The interim final rule was published at 85 FR 21312 on April 17, 2020. The Fed, OCC, and FDIC announced a final rule temporarily deferring appraisal and evaluation requirements that is substantially similar to the interim final rule issued in April. It will allow individuals and businesses to more quickly access real estate equity to help address needs for liquidity as a result of the coronavirus. In response to comments, the final rule clarifies which loans are subject to the deferral. The final rule is effective upon publication in the Federal Register and will expire on December 31, 2020.

The OCC has announced that its Office of Innovation will host three teleconference listening sessions on April 16, 20, and 21, to discuss issues and potential solutions relating to the Paycheck Protection Program (PPP). These sessions will focus on three aspects of the PPP: payroll verification, fraud identification, and backend processes.

• Payroll verification - April 16, 11:00 a.m. – 1:00 p.m. ET. The OCC seeks to facilitate discussion around methods to increase the speed and efficiency of payroll verification for PPP loans during loan application and monitoring processes.
• Fraud identification - April 20, 1:00 p.m. – 3:00 p.m. ET. The OCC seeks to facilitate discussion around solutions that will enable entities to more effectively and efficiently identify fraudulent uses of the PPP, including loan stacking (i.e., receiving PPP loans from more than one lender).
• Backend processes - April 21, 1:00 p.m. – 3:00 p.m. ET. The OCC seeks to facilitate discussion around solutions addressing potential challenges entities may face monitoring PPP loans and during the loan forgiveness process.

Potential solutions may include new products or services (including those developed by fintech companies), partnerships between a bank and fintech company, or other approaches related to responsible innovation in the federal banking system. Each listening session will last approximately two hours. Parties interested in providing their views should contact OCC’s Office of Innovation at innovation@occ.treas.gov and indicate which call they are interested in participating in.

The Federal Trade Commission reported yesterday that the Commission and the Food and Drug Administration have sent warning letters to several companies claiming they can treat or prevent COVID-19.

The CFPB has issued a policy statement that will enable insured institutions to continue to focus on the immediate needs of their customers by taking a flexible approach to the Bureau’s supervision and enforcement of remittance transfers. For international remittance transfers that occur on or after July 21, 2020 and before January 1, 2021, the policy statement states that the Bureau will neither cite supervisory violations nor initiate enforcement actions against insured institutions for continuing to provide estimates to consumers under the temporary exception, instead of actual amounts.

• Press release

The Federal Reserve Board's Enforcement Actions search page reveals that the Federal Reserve System has issued four "Section 19" letters during the first quarter of 2020 to individuals who have been prohibited from participation in the affairs of any insured depository institution due to a conviction, guilty plea or diversion program related to a crime involving dishonesty or breach of trust. The letters were issued to:

• a former affiliated individual of LegacyTexas Bank, Plano, Texas, convicted upon a plea of guilty of bank theft, embezzlement and fraud and false statements in bank entries, reports and transactions.
• a former affiliated individual of Centennial Bank, Blainview, Texas, convicted upon a please of guilty of theft, embezzlement, or misapplication by a bank officer or employee.
• a former affiliated individual of RCB Bank, Broken Arrow, Oklahoma, upon conviction upon a plea of guilty of theft, embezzlement, or misapplication by bank employee.
• a former affiliated individual of High Country Bank, Salida, Colorado, convicted upon a plea of guilty of issuance of a bad check

The Treasury Department reported yesterday that Treasury and the IRS expect "tens of millions" of Americans will receive their Economic Impact (a/k/a Stimulus) payments via direct deposit by Wednesday, April 15. These payments are being issued to eligible 2018 or 2019 federal tax return filers who received a refund via direct deposit.

The IRS plans to launch its "Get My Payment" tool to allow taxpayers who filed tax returns in 2018 or 2019 but did not provide their banking information on their returns to submit direct deposit information and track they status of their payment. As announced earlier, a "Non-Filers: Enter Payment Info Here" portal is available for individuals who don't file tax returns to enter their bank account information. Sending the payments electronically benefits both the recipients, who will get their money sooner, and Treasury, because it costs less per payment than paying by check.

The CFPB has issued an Interpretive Rule on Treatment of Pandemic Relief Payments under Regulation E and Application of the Compulsory Use Prohibition to knock down a barrier to government use of prepaid accounts for distribution of Economic Impact Payments (often referred to as Stimulus Payments) and other relief that might be provided by federal, state or local governments.

Sections 1005.10 and 1005.15 of Regulation E prohibit anyone from conditioning a consumer's receipt of a government benefit upon the consumer's agreement to establish an account with a particular institution for receipt of electronic fund transfers. The Interpretive Rule issued yesterday by the Bureau concludes that, if certain conditions are met, certain pandemic-relief payments are not “government benefits” for purposes of Regulation E and thus these payments are not subject to the compulsory use prohibition in the EFTA and Regulation E.

Specifically, government benefits do not include payments from federal, state, or local governments if those payments: (1) are made to provide assistance to consumers in response to the COVID-19 pandemic or its economic impacts; (2) are not part of an already-established government benefit program; (3) are made on a one-time or otherwise limited basis; and (4) are distributed without a general requirement that consumers apply to the agency to receive funds. The Rule will be effective when published in the Federal Register.

UPDATE: Published at 85 FR 23217 on 4/27/2020; effective on publication.

HUD has announced it is issuing new mortgage payment relief guidance under the CARES Act for borrowers with multifamily mortgages insured by the Federal Housing Administration or borrowers participating in other HUD multifamily housing programs. Servicers must grant multifamily borrowers experiencing financial hardships as a result of COVID-19 up to 90 days of forbearance when the borrower requests assistance. Servicers can grant this forbearance without direct HUD approval if they follow the protocol in HUD’s guidance. To facilitate implementation, HUD is providing a standard Multifamily Forbearance Protocol to reduce paperwork and streamline processing for borrowers, servicers, and lenders. The protocol includes:

• Allowing servicers to grant, without HUD approval, up to 30 days of forbearance for borrowers experiencing a financial hardship due to COVID-19 if the borrower was current on their mortgage payments as of February 1, 2020;
• Allowing automatic forbearance extensions from servicers to borrowers for up to two additional 30-day periods, without HUD approval; and
• Encouraging borrowers to enter into repayment plans with renters (residential and commercial) that experience an income reduction or temporary loss of household income but are able to make up the difference over time, without HUD approval.

HUD has awarded $16 million to public housing authorities to provide tenant protection vouchers to Public Housing (Low-Rent) Program assisted residents. These vouchers will help households with relocation or replacement housing when their public housing units are slated under a HUD-approved plan for demolition and disposition actions or mandatory conversion.

Treasury has announced the launch of a web portal to allow eligible State, local, and tribal governments to receive payments to help offset the costs of their response to the coronavirus pandemic. Once registered through this portal, States, territories, and the District of Columbia will receive promptly half of the funds allocated to them pursuant to the CARES Act. This will fast-track the availability of $71 billion to meet immediate cash flow needs. The remaining balance of the payment amounts due to States, eligible local governments, and tribal governments will be paid no later than April 24, 2020. To ensure that payments are made within the 30-day period specified by the CARES Act, governments must submit completed payment materials not later than 11:59 p.m. EDT on April 17, 2020.

FinCEN has posted a Paycheck Protection Program FAQs document that mirrors two of the SBA's FAQs regarding implementation of the Paycheck Protection Program (PPP) that involve explaining the requirements under the Bank Secrecy Act (BSA), and how lenders can meet those requirements when issuing a PPP loan.

[FinCEN's action adopts the SBA's interpretation of how Beneficial Ownership certification requirements will apply to PPP customers, which differs from FinCEN regulations. At the same time, FinCEN carefully stated in the text preceding the two FAQs, that, as "administrator of the BSA, [FinCEN] is re-publishing those FAQs in this document [and] will update its document with any additional BSA-related FAQs involving the PPP," apparently reclaiming its authority over the interpretation of its own regulations. -- Editor]

The NCUA yesterday announced its approval of an interim final rule that enhances the ability of the Central Liquidity Facility to serve as liquidity backstop to the nation’s credit union system. The interim final rule enhances the NCUA’s regulations on the Central Liquidity Facility to supplement the legislative changes resulting from the Coronavirus Aid, Relief, and Economic Security Act while adding even greater flexibility and relief for member credit unions. The rule makes it easier for credit unions to join the facility as a regular member or through a corporate credit union as part of an agent relationship, and access emergency liquidity should the need arise.

Specifically, the rule:

• Eliminates the six-month waiting period for a new member to receive a loan;
• Makes temporary amendments to the waiting period for a credit union to terminate its membership;
• Eases collateral requirements on some assets; and
• Allows, temporarily, for an agent member to borrow for its own liquidity needs.

The interim rule becomes effective on publication in the Federal Register. Comments on the rule will be accepted for 60 days following publication.

HUD has published [85 FR 20510, 4/13/2020] a notice of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees during HUD's fiscal year ending September 30, 2019.

On Friday, HUD announced it has granted Public Housing Authorities (PHA), Indian Tribes, and Tribally Designated Housing Entities (TDHEs) waiver authorities and ultimate flexibilities so agency staff can focus on assisting their tenants and properties during the COVID-19 pandemic. The waivers implemented through the Office of Public and Indian Housing’s notice provide administrative relief and allow for alternative approaches to various aspects of PHA, Tribal, and TDHE operations in a safe and secure manner. As various parts of the country are experiencing this pandemic at different levels of severity, this notice grants PHAs, Tribes, and TDHEs full discretion to use these waivers in way that best supports their communities.

• HUD notice

Treasury and the IRS have announced the launch of “Non-Filers: Enter Payment Info Here,” a web portal where Americans who did not file a tax return in 2018 or 2019 can submit basic personal information to the IRS so that they can receive stimulus payments. In order to speed payments, individuals should enter their bank account information and their payment will be directly deposited in their bank account. The tool will request basic information to confirm eligibility, calculate and send the Economic Impact Payments:

• Full names and Social Security numbers, including those of a spouse and dependents
• Mailing address
• Bank account type, account and routing numbers

The IRS also said it would be providing another tool by April 17 that will allow individuals to determine the estimated arrival date of their stimulus payment direct deposits and checks.

Treasury Mnuchin has announced details of the Payroll Support Program under the CARES Act which will not require passenger air carriers that will receive $100 million of payroll assistance or less to provide financial instruments as appropriate compensation. For passenger air carriers with payroll support payments up to $100 million, funds will be available promptly upon approval of their applications. The majority of these requests seek less than $10 million. For more information see updates of program implementation under the CARES Act.

FRB Services has created a webpage with updates of its COVID-19 preparedness and related actions.

FDIC FIL-42-2020, issued Friday, announces steps steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Oregon affected by severe storms, tornadoes, straight-line winds and flooding February 5–9, 2020.

The Bureau has posted on its Blog a Guide to COVID-19 economic stimulus relief with answers to common questions about the economic impact payments.

The Federal Reserve announced on Thursday it will provide up to $2.3 trillion in loans to support the economy. This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic. The actions the Federal Reserve is taking today to support employers of all sizes and communities across the country will:

• Bolster the effectiveness of the Small Business Administration's Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses. The PPP provides loans to small businesses so that they can keep their workers on the payroll. The Paycheck Protection Program Liquidity Facility (PPPLF) will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value;
• Ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program. The Department of the Treasury, using funding from the CARES Act, will provide $75 billion in equity to the facility;
• Increase the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF). These three programs will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury; and
• Help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide $35 billion of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act.

Related resources:

• Term Sheet, Term Asset-Backed Securities Loan Facility
• Term Sheet: Primary Market Corporate Credit Facility
• Term Sheet: Secondary Market Corporate Credit Facility
• Term Sheet: Municipal Liquidity Facility
• Term Sheet: Paycheck Protection Program Lending Facility
• Term Sheet: Main Street New Loan Facility
• Term Sheet: Main Street Expanded Loan Facility

Treasury announced yesterday that Secretary Mnuchin had approved the Treasury Department's support of new and expanded lending programs concurrently announced by the Federal Reserve Board.

Treasury and the Internal Revenue Service announced yesterday they are extending over 300 deadlines for administrative acts under the tax law as well as the tax filing and payment deadlines for fiscal year businesses, tax-exempt organizations and certain estates and trusts.

• IRS Administrative Notice 2020-23

The federal bank regulatory agencies announced Thursday an interim final rule to encourage lending to small businesses through the Small Business Administration's Paycheck Protection Program, or PPP. The PPP was established by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and provides loans to small businesses so that they can keep their workers on the payroll during the disruptions caused by the coronavirus. The interim final rule modifies the agencies' capital rules to neutralize the regulatory capital effects of participating in the Federal Reserve's PPP facility because there is no credit or market risk in association with PPP loans pledged to the facility. Consistent with the agencies' current capital rules and the CARES Act requirements, the interim final rule also clarifies that a zero percent risk weight applies to loans covered by the PPP for capital purposes. The rule is effective immediately. Comments will be accepted for 30 days following Federal Register publication.

• Federal Reserve Board press release
• OCC press release and Bulletin 2020-36
• FDIC FIL-37-2020

UPDATE: Published 4/18/2020 at 85 FR 20387. Effective on publication. Comments on the interim final rule are due by 5/13/2020.

The Federal Trade Commission is mailing refund checks totaling $488,629 to consumers who bought golf and kitchen gadgets from a group of online marketers that allegedly used deceptive “free” and “risk-free” trials to sell their products. The FTC is mailing 14,370 checks that average $34 each.

The CFPB has posted an updated article on its Blog reviewing key things student borrowers need to know about their loans and the effect of the CARES Act.

FDIC FIL-38-2020 is an FFIEC notice concerning capital-related revisions to the Call Report and FFIEC 101 Report for March 31, 2020. The changes:

• Revise the definition of eligible retained income in the capital rule;
• Permit banking organizations to neutralize the effects of purchasing assets through the Money Market Mutual Fund Liquidity Facility (MMLF) on their risk-based and leverage capital ratios;
• Provide banking organizations that implement the Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses, Topic 326, Measurement of Credit Losses on Financial Instruments, before the end of 2020 the option to delay for two years an estimate of the current expected credit losses (CECL) methodology’s effect on regulatory capital, relative to the incurred loss methodology’s effect on capital, followed by a three–year transition period; and
• Allow banking organizations to implement the final rule titled Standardized Approach for Calculating the Exposure Amount of Derivative Contracts (SA-CCR rule) for the first quarter of 2020, on a best efforts basis.

The Federal Reserve Board announced Wednesday that it will temporarily and narrowly modify the growth restriction on Wells Fargo & Company so that it can provide additional support to small businesses. The change will only allow the firm to make additional small business loans as part of the Paycheck Protection Program, or PPP, and the Federal Reserve's forthcoming Main Street Lending Program.

The Board will require benefits from the PPP and the Main Street Lending Program to be transferred to the U.S. Treasury or to non-profit organizations approved by the Federal Reserve that support small businesses. The change will be in place as long as those facilities are active.

The Board's growth restriction was implemented in February 2018 because of widespread compliance and operational breakdowns at Wells Fargo that resulted in harm to consumers and because the company's activities were ineffectively overseen by its board of directors. The growth restriction provides an overall cap on the size of the firm's balance sheet. The change announced Wednesday provides additional support to small businesses hurt by the economic effects of the coronavirus by allowing activities from the PPP and the Main Street Lending Program to not count against the cap.

The Treasury/SBA FAQ document for PPP loans was updated yesterday. Two changes addressed lender concerns in additions to the FAQ:

• Question 19: SBA clarified that lenders may use their own note or an SBA form. The agency has released its own form, but it may be revised to address industry feedback to meet lenders’ operational needs.
• Question 20: The lender must make the first disbursement of the loan no later than 10 calendar days after the loan is approved.

​OFAC has published a final rule at 85 FR 19884 in today's Federal Register amending its regulations to adjust certain civil monetary penalties for inflation as required by law. The rule is effective upon publication.

The Federal Reserve Board and the Federal Open Market Committee have released the minutes of the Committee meeting held on March 15, 2020, and of the conference call held on March 2, 2020.

The FTC is mailing checks totaling more than $1 million to individuals targeted by a business opportunity scheme that promised consumers big profits from selling on Amazon. The FTC and the Minnesota Attorney General’s Office alleged that Sellers Playbook, Inc. lured consumers into believing that they were likely to earn thousands of dollars a month selling products on Amazon. In marketing their “system” for selling on Amazon, the defendants made false and unsubstantiated claims, such as make “$20,000 a month” and “Potential Net Profit: $1,287,463.38.” The FTC is mailing 350 checks averaging $2,954 each to victims of the scheme who previously filed a complaint with law enforcement.

• Press release

The Securities and Exchange Commission has announced that it is providing temporary, conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small and medium-sized businesses, including those with operations affected by COVID-19. BDCs were created to provide capital to smaller domestic operating companies that otherwise may not be able to readily access the capital markets. The relief announced Wednesday will provide additional flexibility for BDCs to issue and sell senior securities in order to provide capital to such companies, and to participate in investments in these companies alongside certain private funds that are affiliated with the BDC. The relief is subject to investor protection conditions, including specific requirements for obtaining an independent evaluation of the issuances’ terms and approval by a majority of a BDC’s independent board members.

Our monthly review of the Federal Reserve's Community Reinvestment Act performance evaluation releases reveals that 16 evaluations were made public in March, all with ratings of Satisfactory or better. We congratulate two Missouri banks that received ratings of Outstanding (links are to their evaluation reports):

• The Missouri Bank, Warrenton
• Country Club Bank, Kansas City

Bulletin 2020-34 has been issued by the OCC in support of FinCEN’s regulatory relief and risk-based approach for financial institution compliance to COVID-19. The FinCEN BSA Notice provides for certain regulatory relief under the risk-based approach to BSA compliance, including exempting from beneficial ownership requirements new loans extended to existing customers under the CARES Act Paycheck Protection Program (under certain conditions). The OCC supports this approach and encourages all banks to follow a risk-based approach to managing their BSA compliance programs. When evaluating a bank’s BSA compliance program, the OCC will consider the actions taken by banks to protect and assist employees, customers, and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification requirements, and other risk management processes. Banks are encouraged to contact their examiners if they anticipate delays.

The SEC office of Compliance Inspections and Examinations (OCIE) has issued two risk alerts: Examinations that Focus on Compliance with Regulation Best Interest and Examinations that Focus on Compliance with Form CRS. These risk alerts provide broker-dealers and investment advisers with advance information about the expected scope and content of the initial examinations for compliance with Regulation Best Interest and Form CRS. Regulation Best Interest and Form CRS are key components of a broader package of rules and interpretations, adopted contemporaneously on June 5, 2019, to enhance the quality and transparency of retail investors’ relationships with broker-dealers and investment advisers. The compliance date for Regulation Best Interest and Form CRS is June 30, 2020.

The CFPB has posted a blog article, "Avoid scams while finding help during quarantine," offering advice to older individuals and their caregivers on how to protect themselves or their clients from scammers who are taking advantage of the added vulnerabilities older adults are exposed to during the COVID-19 pandemic. One of the latest scams involves scammers who offer to help with errands, and run off with the money.

The article also offered suggestions to those entrusted to manage someone else's money.