Dodd-Frank News Center

Fed expands access to PPP Liquidity Facility and collateral that can be pledged

This story appeared in Bank Digest.

The Federal Reserve Board has expanded access to its Paycheck Protection Program Liquidity Facility (PPPLF) to additional lenders and expanded the collateral that can be pledged. The changes are intended to facilitate lending to small businesses via the Small Business Administration's Paycheck Protection Program. As a result of the changes, the Fed said, all PPP lenders approved by the SBA, including non-depository institution lenders, are now eligible to participate in the PPPLF. In addition, eligible borrowers will be able to pledge whole PPP loans that they have purchased as collateral to the PPPLF.

Fed expands scope, eligibility for its Main Street Lending Program

This story appeared in Bank Digest.

In light of the ongoing coronavirus pandemic and based on feedback it has received from the public on potential refinements, the Federal Reserve Board is expanding the scope of, and eligibility for, the “Main Street Lending Program.” The program is designed to support the U.S. economy, chiefly by facilitating the flow of credit to small and medium-sized businesses that were in “sound financial condition” before the global pandemic. The Fed has decided to: (1) create a new loan option, with increased risk-sharing by lenders for borrowers with greater leverage; (2) lower the minimum loan size for certain loans from $1 million to $500,000; and (3) expand the pool of businesses eligible to borrow from the program. Senator Kevin Cramer (R-ND) issued a statement saying he was “encouraged by my first review of the Main Street Lending Program’s expansion.”

 

Fed expands scope and duration of Municipal Liquidity Facility

This story appeared in Bank Digest.

The Federal Reserve Board is expanding the scope and duration of the Municipal Liquidity Facility (MLF), which was announced on April 9, 2020, and will offer up to $500 billion in lending to states and municipalities to help manage cash flow stresses caused by the coronavirus pandemic.

Among other changes, the Fed announced new population thresholds it said will allow substantially more entities to borrow directly from the MLF than the initial plan announced on April 9. The termination date for the facility has been extended to Dec. 31, 2020, in order to provide eligible issuers more time and flexibility.

Fed takes temporary actions to increase availability of intraday credit

This story appeared in Bank Digest.

The Federal Reserve Board has announced temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. The Fed said these temporary actions are consistent with the series of actions it has announced to support the flow of credit to households and businesses and to mitigate the disruptions from COVID-19. These temporary actions will be applied immediately and will remain in effect until Sept. 30, 2020, unless the Fed communicates otherwise prior to that date.

 

Fed outlines public disclosure parameters for lending and liquidity facilities

This story appeared in Bank Digest.

The Federal Reserve Board has outlined the public information it will make available regarding its programs to support the flow of credit to households and businesses and thereby foster economic recovery during the COVID-19 pandemic national emergency. Specifically, the Fed said it will report substantial amounts of information on a monthly basis for the liquidity and lending facilities using Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) funding. The information includes: (1) names and details of participants in each facility; (2) amounts borrowed and interest rate charged; and (3) overall costs, revenues, and fees for each facility.

 

Paycheck Protection Program Liquidity Facility fully operational

This story appeared in Bank Digest. 

The Federal Reserve  Board has announced that its Paycheck Protection Program Liquidity Facility is fully operational and available to provide liquidity to eligible financial institutions. The Small Business Administration's Paycheck Protection Program (PPP) guarantees loans extended by qualified lenders to small businesses so that those businesses can keep workers employed. The Fed said its Paycheck Protection Program Liquidity Facility will support the effectiveness of the PPP by extending credit to financial institutions that make PPP loans, using such loans as collateral.

Agencies to host webinar on transition provision delaying CECL’s impact on regulatory capital

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency will host a webinar to discuss a new transition provision in an interagency interim final rule to delay the impact that the current expected credit losses (CECL) methodology for estimating allowances for credit losses has on regulatory capital. The webinar is scheduled for April 14, 2020, at 3:00 p.m. Eastern Time. The transition provision under the interim final rule is available to banking organizations that are required by U.S. generally accepted accounting principles to adopt CECL in 2020.

Fed encourages institutions to consider participating in COVID-19 relief programs

This story appeared in Bank Digest.

The Federal Reserve Board has informed financial institutions it supervises about several forms of relief available to small businesses affected by COVID-19 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748). The Fed is encouraging financial institutions to consider participating in programs administered by the Small Business Administration and programs offered by the Treasury Department. The Fed said its examiners will not criticize supervised institutions that prudently use these programs.

 

Fed announces temporary change to supplementary leverage ratio rule

This story appeared in Bank Digest.

To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses, the Fed is implementing a temporary change to its supplementary leverage ratio rule. According to the Fed's press release, the change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for holding companies and will be in effect until March 31, 2021.

The change is effective immediately, and the public comment period will be 45 days.

Agencies clarify interaction of CECL revised transition and CARES Act relief

This story appeared in Bank Digest.

The Federal Deposit Insurance Corporation, Federal Reserve Board, and Office of the Comptroller of the Currency have issued a joint statement clarifying the interaction of their Current Expected Credit Loss (CECL) revised transition and the statutory relief afforded under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748).

On March 27, 2020, the agencies issued an interim final rule (CECL IFR) that delays the estimated impact on regulatory capital stemming from the implementation of CECL. The CARES Act was also signed into law on that day, and it provides banking organizations with optional, temporary relief from complying with CECL.

Under the agencies' joint statement, no banking organization is required to comply with CECL during the statutory relief period in the CARES Act, including banking organizations that otherwise would be required to adopt CECL in 2020 under U.S. generally accepted accounting principles. In addition, banking organizations that elect to use the CARES Act's relief may also elect the regulatory capital relief provided under the CECL IFR after the expiration of the statutory relief period.