COVID-19 UPDATES / GOVERNMENT RELATIONS
Virtual Advocacy to Replace Regional Meetings
The 2020 IBA Regional Meetings originally scheduled this summer have been canceled due to the COVID-19 pandemic. Grassroots advocacy will continue, however, through the newly formatted IBA Annual Washington Trip to be held virtually throughout the summer. Bankers are encouraged to participate in this important advocacy outreach; details forthcoming. For more information, contact Josh Myers.
House Passes PPP Reform Bill
The House voted 417-1 to pass legislation to ease restrictions on the Small Business Administration’s Paycheck Protection Program yesterday.
H.R. 7010: Paycheck Protection Program Flexibility Act of 2020, sponsored by Reps. Dean Phillips (D-Minn.) and Chip Roy (R-Texas), extends the time for businesses to spend the money from eight to 24 weeks and lowers the amount that must be spent on payroll costs from 75% to 60%.
As Launch Date Nears, Boston Fed Releases MSLP Forms, Updated FAQs
The Federal Reserve Bank of Boston released several borrower and lender documents for the Fed’s Main Street Lending Program, which is expected to launch in the coming days. The Boston Fed, which is administering the MSLP on behalf of the Fed system, also released a revised FAQ document on the program.
The documents released include lender registration certifications and covenants and lender wire instructions required to become an MSLP lender. They also include the lender agreements and borrower certifications and covenants required at the time an MSLP loan participation is sold to Boston Fed.
The revised FAQ document adds numerous new answers that provide more details on MSLP design, lender and borrower eligibility, the Main Street Expanded Loan Fund’s upsized tranches, lender fees, EBITDA adjustments, participations and regulatory requirements (including treatment under stress tests and beneficial ownership rules).
Acting Comptroller Brian P. Brooks Releases Statement
This morning, Acting Comptroller of the Currency Brian P. Brooks released a statement regarding his new position as he takes over the helm after Joseph Otting’s retirement this month. The statement includes four priorities that the OCC will focus on in the future: 1) build upon responsible innovation to help the banking system keep up with changes in the way American consumers and businesses manage their finances; 2) enhance the strength of the federal banking system by enhancing the scope and relevance of the national charter; 3) ensure banks serve their entire community through fair access to credit, capital, and financial services; and 4) provide OCC employees engaging, rewarding, and challenging career opportunities.
IRS Offers Resources on Economic Impact Payments
As the IRS continues distributing CARES Act economic impact payments to individuals, It has also released several resources related to EIPs and other coronavirus tax relief measures.
Among the latest resources are information about EIPs being issued through prepaid debit cards, a video on the Get My Payment tool, EIP social media content for Americans experiencing homelessness, and updated FAQs on EIPs and other COVID-19 tax relief. The IRS also published a state-by-state breakdown of economic impact payment distribution.
Agencies Issue FAQs on Coronavirus, CRA Activities
The Office of the Comptroller of the Currency has released a list of 13 interagency frequently asked questions related to the Community Reinvestment Act and the coronavirus pandemic. Among other topics, the document clarifies that:
• The agencies will consider COVID-19-affected areas under major disaster declarations (including all 50 states, D.C., and certain territories) as disaster areas for CRA purposes for a period extending six months after the disaster declaration is lifted.
• Banks will receive favorable CRA consideration for “community development activities that are responsive to community needs and conducted in response to COVID-19.”
• A bank may receive CRA consideration for activities in broader statewide or regional areas that include the bank’s assessment areas.
• Paycheck Protection Program loans will be considered “particularly responsive” to community needs when made to businesses with gross annual revenues of $1 million or less or to businesses located in low-to-moderate-income geographies or distressed or underserved non-metropolitan, middle-income locales.
• PPP loans of $1 million or less or that create jobs for LMI individuals or in LMI areas generally qualify as community development loans. (Larger PPP loans may otherwise qualify if they meet the test.)
• Main Street Lending Program loans that meet relevant CRA requirements may receive CRA consideration.
• Bank activities to promote housing stability for LMI renters experiencing financial hardship due to COVID-19 “are considered particularly responsive to the unique challenges presented by the COVID-19 emergency.”
• Cashing Economic Impact Payment checks for non-customers at no charge and waiving late fees and overdraft charges are examples of “particularly responsive” services for LMI individuals.
FinCEN to Update Methodology for Calculating Regulatory Burden of SARs
Bank Secrecy Act reporting institutions annually spend roughly $206 million and 5.4 million hours of work investigating, evaluating cases and filing Suspicious Activity Reports, according to a new analysis from the Financial Crimes Enforcement Network. Of this, approximately 52% of the dollar cost and burden hours are borne by banks, with credit unions, money services businesses and other businesses accounting for the rest.
The figures were released in a standard Paperwork Reduction Act regulatory filing seeking comments on the renewal of the SAR form. As it is doing with the Currency Transaction Report form, FinCEN is re-analyzing how it calculates the burden imposed on financial institutions for filing the form, trying to capture the impact that technology has on submitting these reports. Previously, FinCEN based its assessment of the SAR regulatory burden on the functions associated with filling out the SAR form itself, but FinCEN noted that SAR filers spend a great deal of time and money on monitoring systems, alert reviews, case reviews and documentation well before a decision is made to file a SAR. FinCEN proposed to incorporate time and money spent on case reviews, documentation and the SAR filing process, including recordkeeping on cases not converted to SARs, into the SAR burden estimate.
As part of the SAR renewal filing, FinCEN sought comments on its methodology, the reasonableness of its estimates and calculations and its segmentation of SAR filers. Comments are due by July 27.
USDA $16B Direct Payment Program Available
USDA is accepting applications for direct payments to farmers and ranchers now through August 28, 2020. Applicants can also manually download the application form, AD-3114, and as needed, the AD-3114A continuation form.
Federal Reserve Extends Community Advisory Council Application Deadline
The Federal Reserve Board has extended the application period for membership on the Community Advisory Council from June 5 to July 3, 2020, in light of the COVID-19 pandemic. The CAC was formed in 2015 and advises the board on issues affecting consumers and communities.
OCC Rule Clarifies Virtual Meeting Options for National Banks, Federal Thrifts
To facilitate banks’ needs to hold meetings during the coronavirus pandemic, the OCC issued an interim final rule clarifying that national banks and federal thrifts may hold virtual board, shareholder and (as applicable) member meetings using remote communication tools. The rule, which takes effect immediately, permanently amends OCC rules about telephonic or electronic participation, as well as advance notice of meetings, to reflect the availability of today’s advanced virtual meeting technology.
“The amendments made by this IFR will enable national banks and federal savings associations to conduct necessary meetings remotely during the COVID-19 emergency as well as during any other future emergency when in-person meetings may not be feasible,” the OCC said, noting that they will also afford OCC-supervised institutions with more flexibility, greater participation and reduced costs for institutions and participants.
FDIC Extends Comment Period on ILC Proposal
The Federal Deposit Insurance Corp. extended the deadline to comment on its proposal to codify its existing practices for supervising industrial loan companies and their parent companies. Comments are now due by July 1.
Freddie Mac Issues Guidance for Sellers for Underwriting Self-Employed Borrowers
Freddie Mac issued a bulletin providing temporary guidance for underwriting mortgage borrowers whose income is derived from self-employment during the coronavirus pandemic. At a minimum, sellers must obtain an unaudited year-to-date profit loss statement signed by the borrower that reports business revenue, expenses and net income and two months’ business account statements no older than the last two months represented on the YTD profit and loss statement. Alternatively, sellers may use an audited YTD profit and loss statement.
The bulletin also provides detailed guidance for reviewing this documentation, determining that a borrower has a stable monthly income and conducting a business review and analysis. Sellers are encouraged to apply these temporary requirements to existing mortgages in process, and they must be applied to mortgages with application received dates on or after June 11, 2020, until further notice.
In addition, the bulletin also provides temporary flexibilities for CHOICERenovation Mortgages, deliver requirements for “no cash-out” refinance mortgages and temporary eligibility requirements related to the purchase of delinquent mortgages in forbearance.
ICYMI - SBA Issues New Guidance on PPP Lending
The Small Business Administration issued two interim final rules on Paycheck Protection Program requirements.
One interim final rule focuses on loan review procedures and related borrower and lender responsibilities, such as:
• SBA reviews of individual PPP loans.
• Borrower representations and statements that SBA will review.
• What lenders should review.
• The timeline for lender decisions on loan forgiveness applications.
• What lenders should do if notified that SBA is reviewing a PPP loan.
• Lender fees subject to clawback if SBA determines a borrower is ineligible.
The other interim final rule provides details on loan forgiveness, including:
• The general process to obtain loan forgiveness.
• Payroll and nonpayroll costs eligible for loan forgiveness.
• Reductions to the Loan Forgiveness Amount based on reduced employees or compensation.
• Documentation requirements, including SBA Form 3508.
The new rules follow the release of a Procedural Notice on submitting the initial SBA Form 1502 to report on PPP loans and collect the processing fees on fully disbursed loans. Under a separate interim final rule, the deadline to submit the initial SBA Form 1502 for PPP loans is now the later of: (1) May 29, 2020, or (2) 10 calendar days after disbursement or cancellation of the PPP loan.
Read lender and borrower responsibilities IFR
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.