Our take: The changing regulatory landscape

Change is a constant so move with confidence by staying up to date.

Current topics - May 21, 2020

On our radar: Crisis, CRA, and FHFA

We are off this week for the upcoming holiday but will be back next week to cover these notable developments in full:

1. Agencies continue to offer relief and flexibility for crisis management. This week, the financial services regulatory agencies have continued to take actions to support the economy and markets in response to heightened volatility and uncertainty. Specifically:

  • On Wednesday, the Federal Reserve Bank of New York (FRBNY) announced that 6/17/20 will be the first subscription date for the Term Asset-Backed Securities Loan Facility (TALF) and 6/25/20 will be the first loan closing date. The FRBNY also released documents and forms as well as an updated set of FAQs on the facility including more information on operational mechanics, requirements for newly-issued ABS, the responsibility of TALF Agent banks, loan subscription and closing.
  • On Wednesday, the Fed, FDIC, OCC and NCUA released a set of principles for banks, savings associations and credit unions to offer small-dollar loans.
  • On Tuesday, the Senate Banking Committee heard testimony from Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin on the quarterly CARES Act report to Congress. Mnuchin said he expects the Main Street Lending Program and Municipal Liquidity Facility to be up and running by the end of May.
  • Over the course of the last week, Treasury and the Small Business Administration (SBA) released the Paycheck Protection Program (PPP) loan forgiveness application, an interim final rule on the treatment of entities with foreign affiliates, new details on PPP loan approvals through 5/16/20 and updated their PPP FAQs to say that the deadline for lenders to complete the necessary reporting has been extended to the later of 5/29/20 or 10 calendar days after the disbursement or cancellation of the PPP loan.
  • On Monday, the FRBNY released application materials for states, counties and cities interested in selling eligible notes to the Municipal Liquidity Facility (MLF).

2. Otting goes solo in finalizing CRA reform, announces departure. Yesterday, the OCC finalized its Community Reinvestment Act (CRA) reform rule. The FDIC, which joined in the proposal, did not sign on to the final rule. Today, Comptroller Joseph Otting announced that he will step down on May 29 and that chief operating officer Brian Brooks will serve as Acting Comptroller upon his departure.

3. FHFA proposes capital requirements for Enterprises. Yesterday, the Federal Housing Finance Agency (FHFA) proposed a new capital framework for Fannie Mae and Freddie Mac (the Enterprises). FHFA first proposed a framework in 2018 and made several changes in this new proposal, including a requirement for the Enterprises to hold capital equivalent to 3.85% of their total assets and 13.9% of risk-weighted assets. The framework also includes risk-based capital requirements, backstop leverage requirements, a stress capital buffer and a countercyclical capital buffer.

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Julien Courbe

Financial Services Advisory Leader, PwC US

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