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California announces statewide shelter-in-place
On March 19, the California Governor announced a statewide shelter in place. Per the announcement, nonessential businesses must close. Banks are considered “essential businesses” and may remain open in California.
Indiana Securities Commissioner eases certain filing and other requirements for financial professionals
On March 24, the Indiana Securities Commissioner issued an administrative order providing relief to broker-dealers, investment advisers, and their registered agents or investment adviser representatives affected by the Covid-19 outbreak. Among other things, the administrative order provides the following relief:
- creates a temporary exemption from registration where a person is working from a location outside of the jurisdiction where that person is currently registered, as long as the person notifies the Division;
- permits firms to submit Form U4 electronically without obtaining physical signatures until it is practicable to do so;
- grants a 45-day extension of time for state registered investment advisers to adhere to any filing, updating, or customer delivery requirements required by Forms ADV; and
- extends the time to May 15 for any broker-dealer or investment adviser to submit complete responses to the 2020 Investment Adviser/Broker-Dealer Questionnaire.
Kentucky Department of Financial Institutions provide guidance to non-depository institutions
On March 24, The Kentucky Department of Financial Institutions (DFI) provided guidance to non-depository institutions to take steps to comply with CDC directives and Governor Andy Beshear’s guidance and executive orders. Entities are ordered to reduce face-to-face transactions; work with customers affected by the coronavirus to meet their financial needs; implement policies and procedures to work constructively with customers (including by restructuring existing loans, extending repayment terms, and waiving fees); manage COVID-19 related staffing issues; and ensure that business continuity plans include pandemic planning.
SCOTUS extends filing deadline
On March 19, the U.S. Supreme Court issued an order extending the deadline to file any petition for a writ of certiorari due on or after the date of the order “to 150 days from the date of the lower court judgment, order denying discretionary review, or order denying a timely petition for rehearing.” Motions for extensions of time pursuant to Rule 30.4 will ordinarily be granted as a matter of course if the difficulties relate to Covid-19 and if the length of extension requested is reasonable under the circumstances. The Clerk will also entertain motions to delay the distribution of petitions for writs of certiorari where the petitioner’s grounds for additional time to file a reply are due to difficulties related to Covid-19. These modifications should indicate whether the opposing party has an objection. The Court emphasizes that these modifications—which will remain in effect until further order of the Court—do not apply to cases that have been granted certiorari or where a direct appeal or an original action has been set for argument.
FDIC asks FASB to delay CECL rules due to Covid-19
On March 19, the FDIC sent a letter to the Financial Accounting Standards Board (FASB) encouraging FASB to delay transitions to and exclusions from certain accounting rules, including (i) excluding Covid-19-related modifications from being considered a concession when determining a troubled debt restructuring classification; (ii) permitting financial institutions an option to postpone implementation of the current expected credit losses (CECL) methodology given the current economic environment; and (iii) imposing a moratorium on the effective date for institutions that are not currently required to implement CECL to allow these financial institutions to focus on immediate business challenges relating to the impacts of Covid-19. CSBS issued a statement on March 20 announcing it fully supports the FDIC’s request, stating the delay will give banks additional time to focus on their customers.
Alabama State Bank Dept. issues Covid-19 lending/borrowing guidance
On March 19, the Alabama State Bank Department (ASBD) issued guidance on lending and borrowing in light of Covid-19. ASBD notes that it has historically required Other Real Estate (ORE) properties that are held for five years to be written down to $1 if the bank has not received written approval of the Superintendent for an extended holding period. Effective immediately, ASBD’s guidance provides that where write-downs have been required for properties that are beyond the five-year limit, banks may discontinue the required write-downs and hold the properties at current book value.
Fed agencies discuss CRA considerations in response to Covid-19
On March 19, the FDIC, Federal Reserve Board, and the OCC issued a joint statement encouraging financial institutions to work with low and moderate-income customers and communities who may be adversely affected by Covid-19. The agencies state that they will provide favorable CRA consideration for financial institution’s retail banking services and retail lending activities in their assessment areas that respond to the needs of affected low and moderate-income individuals, small businesses, and small farms consistent with safe and sound banking practices. These activities may include: (i) waiving certain fees; (ii) easing check-cashing restrictions; (iii) expanding the availability of short-term, unsecured credit and increasing credit card limits for creditworthy borrowers; (iv) providing alternative service options; and (v) offering payment accommodations, such as permitting deferred or skipped payments or extending payment due dates to avoid delinquencies and negative credit bureau reporting. Financial institutions that engage in qualifying community development (CD) activities will also receive favorable CRA consideration, including but not limited to loans, investments, or services that support digital access for low and moderate-income individuals or communities, as well as economic development activities that sustain small business operations. In addition, favorable consideration will also be given to CD activities that help to stabilize communities affected by Covid-19 located in a broader statewide or regional area that encompasses a financial institution’s CRA assessment area, “provided that such institutions are responsive to the CD needs and opportunities that exist in their own assessment area(s).” The joint statement is effective until six months after the national emergency declaration is lifted, unless extended by the agencies.
Fed agencies issue capital and liquidity buffers FAQs
On March 19, the FDIC, the Fed, and the OCC released FAQs regarding the use of capital and liquidity buffers. (See OCC Bulletin 2020-17, “Pandemic Planning: Joint Questions and Answers Regarding Statement About the Use of Capital and Liquidity Buffers.”) The joint questions and answers follow a joint statement issued by the agencies on March 17 to encourage banks to utilize capital and liquidity buffers in order to continue lending activities. The FAQs were created in response to questions provided by banking organizations. Topics covered in the FAQs include (i) liquidity buffers; (ii) capital buffers; (iii) triggers for recovery and resolution plans; and (iv) “total loss-absorbing capacity rule.” See the FDIC announcement here and FIL-20-2020 here.
Virginia State Corporation Commission certifies financial services workers as critical infrastructure workers
On March 24, the Virginia State Corporation Commission certified certain financial services workers as critical infrastructure workers. This includes those who (i) process, and maintain for processing, financial transactions and services, such as payment, clearing and settlement services, wholesale funding, insuarance servcies, and capital markets activities; (ii) provide consumer access to banking and lending services; (iii) support financial operations; and (iv) key third-party providers who deliver core services.
New York mandates non-essential businesses to reduce in-office workforce
On March 19, the New York Governor signed Executive Order 202.7, mandating that all non-essential businesses that require in-office personnel to decrease their in-office workforce by 75 percent, and directing implementation of work-from-home policies. Banks are considered essential services, and are not subject to the Executive Order. The Executive Order also authorized notary services to be performed utilizing audio-visual technology, provided compliance with certain conditions for authentication and process can be met.