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CFPB video instructs non-tax filers how to receive stimulus payments
On April 21, the CFPB announced the release of a video—aimed at consumers who do not file taxes—that describes the steps those consumers should take in order to receive their economic impact payments. The video explains that most Americans will automatically receive their economic stimulus payments from the IRS, but those who do not may need to submit their information and specify how they would like to receive their payments. Consumers are informed that if they do not submit their information, they will be mailed paper checks, which will take longer to receive than a direct deposit. In the announcement, Bureau Director Kathleen Kraninger states that the video “is intended to help consumers navigate the economic impact payments as well as helping them avoid scams related to the payments.” The announcement also provides eligibility guidelines for the stimulus payments, a link to frequently asked questions about the payments, and a link to additional Bureau information related to Covid-19.
Fed provides FAQs on PPP liquidity facility
On April 20, the Federal Reserve Board (Fed) released a series of frequently asked questions (FAQs) and answers relating to the agency’s newly launched Paycheck Protection Program Liquidity Facility (PPPLF). As previously covered by InfoBytes, the PPPLF was up and running on April 16 to provide liquidity to banks making loans to small businesses pursuant to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The SBA-guaranteed PPP loans are used as collateral for term financing provided by the PPPLF. The PPPLF extends credit to financial institutions participating in the PPP at a fixed rate of 35 basis points. Additional information regarding the PPPLF, including a term sheet, borrowing documentation, and operational documentation including samples can be found on the Fed website here.
OCC bulletin highlights Covid-19 assistance to businesses, consumers, and governments through Fed facilities
On April 20, the OCC issued a bulletin to spotlight the many Federal Reserve (Fed) lending programs established to provide relief from the effects of the Covid-19 pandemic and to highlight how the programs benefit consumers, businesses, and state and local governments. The Fed has supported the economy in a number of ways, particularly through establishing or expanding loan, credit, and liquidity facilities including (i) the Paycheck Protection Liquidity Facility (PPPLF); (ii) the Term Asset-Backed Securities Loan Facility (TALF); (iii) the Primary and Secondary Market Corporate Credit Facilities (PMCCF) and (SMCCF); (iv) the Municipal Liquidity Facility (MLF); and (v) the new Main Street Facility. As previously covered by a Buckley Special Alert, the PPPLF provides liquidity to banks to enable them to lend to small business owners so they can keep their businesses running and pay their employees. The TALF, PMCCF, and SMCCF ensure the flow of credit to consumers and businesses for things such as auto loans, credit card loans, and student loans. The MLF facilitates the flow of cash into states, counties, and cities so that their governments may continue to provide services to residents. Finally, the Main Street Facility—like the PPPLF—supports lending to businesses, in which banks originate Main Street Lending Program loans to small and medium-sized businesses by selling the majority of the loans to the Main Street Facility. Further details about the Main Street Facility can be found in a Buckley Special Alert here.
OFAC advises risk-based compliance approach during Covid-19 crisis
On April 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a statement reminding businesses—including financial institutions—to adhere to a risk-based administration of their sanctions compliance plans. The release notes that, in light of Covid-19, businesses may need to reassign resources otherwise dedicated to sanctions compliance to other areas. If apparent violations are made due to this reallocation of resources, OFAC asserts that it will take this into consideration when determining the appropriate response to the business. Also, businesses and persons subject to OFAC regulatory authority are urged to contact OFAC if the businesses anticipate any delays in satisfying deadlines or in filing required submissions and reports, including meeting the 10-day deadline for filing reject reports. The statement provides OFAC contact information appropriate to a number of situations, including matters related to reject reports, subpoenas, license reports, requests for reconsideration, and self-disclosures.
NCUA announces Covid-19 relief measures for credit unions
On April 17, the NCUA released a letter to federally insured credit unions to address temporary relief available as a result of Covid-19. The letter covers a number of matters discussed at the NCUA board’s open meeting held on April 16, including an interim final rule (IFR) issued on April 13 (covered by InfoBytes here) that permits credit unions to access the NCUA’s Central Liquidity Facility with no waiting period for advances. The letter also provides details on two real estate appraisal rules approved by the Board to provide regulatory relief for credit unions: (i) an IFR “that temporarily defers real estate-related appraisals and evaluations” for up to 120 days; and (ii) a final rule that increases the threshold amount for which a transaction involving real estate requires an appraisal from $250,000 to $400,000. Both the IFR and the final rule take effect upon publication in the Federal Register and expire on December 31. In addition, the board approved a final rule which (i) increases the maximum aggregate amount of loans a credit union can purchase from one lender without a waiver to “the greater of $5 million or 200 percent of a federally insured credit union’s net worth”; (ii) temporarily suspends the limit “on the eligible obligations that a federal credit union may purchase and hold”; and (iii) also suspends “the required timeframes for the occupancy or disposal of properties not being used to conduct business or that have been abandoned.”
FFIEC updates BSA/AML examination manual
On April 15, the FFIEC published the updated Bank Secrecy Act/Anti-Money Laundering Examination Manual (Manual). According to an interagency statement, revisions were made throughout the updated sections to incorporate regulatory changes since the Manual was last updated in 2014 and “to ensure language clearly distinguishes between mandatory regulatory requirements and supervisory expectations.” The revisions can be identified by a 2020 date in the table of contents and include:
- Examiners should tailor Bank Secrecy Act/anti-money laundering (BSA/AML) examinations to a bank’s risk profile.
- Examiners should assess the adequacy of an institution’s BSA/AML compliance program and risk assessment processes. This includes identifying specific risk categories unique to a bank and analyzing the identified information to asses risks within these categories. The Manual notes, however, that there is no particular format or method for a bank to use for its risk assessment process, and reiterates that risk categories may vary based on a bank’s size, complexity, and organizational structure and that “updates may occur as necessary to align the risk assessment with a significant change in a bank’s risk profile.”
- Examiners should be mindful that banks have flexibility when designing a BSA/AML compliance program and that “minor weaknesses, deficiencies, and technical violations alone are not indicative of an inadequate program.”
The agencies acknowledge that they “are aware of the uncertainty faced by financial institutions during this unprecedented time” and emphasize that the updated Manual, “which supports tailored examination work, has been in process for an extended period and should not be interpreted as new instructions or as a new or increased focus.” Additional updates to the remaining Manual sections will be released in phases at a later date.
Fed issues rule to temporarily allow bank insiders access to PPP
On April 17, the Federal Reserve Board (Fed) announced an interim final rule to allow “certain bank directors and shareholders” to apply for loans from the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The rule will temporarily suspend some of the requirements of Federal Reserve Act Section 22(h) and Regulation O, to permit banks to extend credit to bank insiders, but only for PPP loans. This announcement comes after the SBA recently issued its own interim final rule regarding eligibility of directors and shareholders to apply for PPP loans for their own small businesses. The Fed’s interim final rule is effective upon publication in the Federal Register and comments must be received within 45 days of publication.
Agencies to hold webinar for bankers on loan modifications and reporting
On April 16, the FDIC released FIL-46-2020, announcing a webinar to provide accounting and reporting guidance for bankers pursuant to Section 4013 of the CARES Act and the revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (covered by InfoBytes here). The webinar is scheduled for Friday, April 24 at 3:00 pm EDT and will be jointly hosted by the FDIC, the Federal Reserve, the OCC, and the NCUA. Participants are encouraged to email questions prior to the webinar to asktheregulators@stls.frb.org. To register for the webinar, click here.
CFPB raises HMDA reporting thresholds
On April 16, the CFPB issued a final rule permanently raising coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under HMDA. As previously covered by InfoBytes, these changes were first proposed by the Bureau last May. The final rule, which amends Regulation C, increases the permanent threshold from 25 to 100 loans starting July 1, 2020 and is applicable to both depository and nondepository institutions. The Bureau states in an executive summary that newly excluded institutions can stop collecting HMDA data on their closed-end mortgage loans beginning July 1, 2020; however, these institutions may still be obligated to collect home loan activity information required by other regulations. Under the final rule, newly excluded institutions are still required to record closed-end data for the first quarter of 2020; however because these institutions would not otherwise report the data until early 2021, the final rule relieves newly excluded institutions of the March 1, 2021 reporting obligation on data collected in 2020 (including closed-end mortgage loan data collected in 2020 prior to July 1, 2020). The Bureau notes that newly excluded institutions “may voluntarily report HMDA data on closed-end mortgage loans in 2021 as long as the institution reports data for the full calendar year 2020.”
The final rule also increases the permanent threshold for collecting and reporting data about open-end lines of credit from 100 to 200, however this change will not take effect until January 1, 2022, when the current temporary threshold of 500 open-end lines of credit expires (covered by InfoBytes here). Beginning in 2022, both depository and nondepository institutions that meet this threshold must report data on open-end lines of credit by March 1 of the following calendar year.
Additional resources, including a timeline of key dates and institutional/transactional coverage charts are available here. “The Bureau recognizes the operational challenges confronted by institutions due to the current COVID-19 pandemic,” the CFPB states in its press release. “The Bureau anticipates that this final rule, once effective, will reduce regulatory burden on smaller institutions to help those institutions to focus on responding to consumers in need now and in the longer term.”
FDIC updates Covid-19 FAQs for financial institutions
On April 15, the FDIC released updates to its list of Covid-19 frequently asked questions (FAQs) for financial institutions. The FAQs were originally released on March 19, covering bank operational issues and urging banks to work with borrowers who are experiencing payment difficulties due to Covid-19, as reported by InfoBytes here. New FAQs discuss credit reporting of payment accommodations, reminding lenders to report borrower accounts as current, provided the borrowers continue to observe the terms of the accommodations. The guidance also points financial institutions to a recent CFPB statement (covered here) for guidance on the FCRA under the CARES Act. The FDIC also updated the Troubled Debt Restructurings (TDRs) guidance, emphasizing that financial institutions do not need to classify Covid-19 borrower payment accommodations as TDRs if certain criteria are met, and that examiners “will not criticize prudent efforts to modify the terms on existing loans to affected customers.” Other updates to the FAQs include, among other things: (i) obligations to obtain updated real estate valuation information for Covid-19 related loan modifications; (ii) the use of alternative signatures for Part 363 annual reports and other notices; (iii) real estate loans in excess of loan-to-value percentages for loans refinanced by borrowers impacted by Covid-19; (iv) risk-based capital rules regarding multi-family loan modifications; (v) eligible Community Reinvestment Act activities during the Covid-19 pandemic; and (vi) Bank Secrecy Act issues regarding filing requirements, raising compliance challenges with FinCEN, and whether loans under the Small Business Administration’s Paycheck Protection Program are considered new accounts for customer due diligence purposes.