June 17, 2020                                                                                                      No copyright infringement intended
 
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PPP Loan Forgiveness Changes Implemented             
 
The Small Business Administration issued a new interim final rule implementing in regulation changes made to the Paycheck Protection Program loan forgiveness process by the PPP Flexibility Act (PPPFA) and other recent developments, including the SBA's simplified Form 3508EZ forgiveness application.
 
The rule aligns previous rules to reflect provisions of the PPPFA, including the covered period for forgiveness, non-payroll costs eligible for forgiveness, reductions in the forgiven amount and the timing of when borrowers must apply for forgiveness to avoid making payments. It confirms that borrowers may submit forgiveness applications any time on or before the loan matures, including before the end of the covered period, provided they have used all of the loan funds for which they wish to apply for forgiveness.
 
The rule also incorporates exemptions in the PPPFA that preserve loan forgiveness for employers that made good-faith attempts to rehire employees or fill vacant positions (and retained a previous exemption for employers that have reduced employee hours and offered in good faith to restore them) or whose business could not return to normal because of public health directives. SBA interpreted the latter exemption to include "both direct and indirect compliance" with state and local shutdown orders as well as federal guidance.
 
Expect further information from ACB and the SBA soon.
 
 
FDIC Offsets PPP Impact on Deposit Insurance Assessments             
 
The FDIC approved a final rule to ensure banks will not be subjected to significantly higher deposit insurance assessments for participating in the Paycheck Protection Program, PPP Liquidity Facility, and Money Market Mutual Fund Liquidity Facility.
 
The final rule generally removes PPP loans from the assessment rate and provides an offset for increases in the assessment base attributable to participation in these programs. The final rule will take effect immediately with an application date of April 1, 2020, and changes will apply to assessments starting in the second quarter of 2020.
 
 
OCC Reduces Assessments             
 
The Office of the Comptroller of the Currency (OCC) approved an interim final rule (IFR) that will reduce assessments due to be paid to the OCC on September 30, 2020.
 
The OCC is providing this relief in response to the impact of the national emergency related to coronavirus (COVID-19).
 
"Banks have played an important role in the national response to COVID-19," Acting Comptroller of the Currency Brian P. Brooks said. "As a result, many banks took on significant volumes of additional assets while providing relief to their customers as part of these federal programs. Banks should not be penalized by these efforts to support our national recovery. This interim final rule provides temporary relief against the adverse impact of COVID-19 on our nation's banks that continue to be critical to our economic strength and recovery."
 
Under the IFR, assessments due on September 30, 2020, for national banks, federal savings associations, and federal branches and agencies of foreign banks (collectively, banks) will be calculated using the December 31, 2019, "Consolidated Reports of Condition and Income" (call report) for each institution, rather than the June 30, 2020, call report. This change will result in lower assessments for most OCC-supervised banks. However, if a bank's assets as reported on the June 30, 2020, call report are lower than on its December 31, 2019, report, the OCC will calculate the assessment due on September 30 for the bank using the June 30 call report. This ensures all banks pay the lower of the two options.
 
This one-time change in calculating assessments follows the 10-percent reduction in the General Assessment Fee Schedule implemented in the 2019 assessment year and the additional 10-percent reduction in the schedule for 2020.   
 
 
CFPB to Issue Binding Advisory Opinions            
 
Under a new pilot program launched by the Consumer Financial Protection Bureau, financial institutions seeking to comply with existing regulations may request an advisory opinion from the bureau to address areas of uncertainty. These advisory opinions-which would be published in the Federal Register-would be considered binding interpretive rules that banks and other institutions may rely on. Requests for advisory opinions may be emailed to advisoryopinion@cfpb.gov.
 
The CFPB said it will select topics for advisory opinions based on four priorities: providing consumers with timely and understandable information to make responsible decisions; reducing regulatory burdens; ensuring consistency in enforcement of federal consumer financial laws; and ensuring markets for consumer financial products operate transparently and efficiently to facilitate access and innovation.
 
The bureau will also consider whether a given issue had been noted during prior examinations as one that would benefit from additional clarity and whether the issue concerns an ambiguity not previously addressed in a previous interpretive rule or other authoritative source. The bureau added that there would be "a strong presumption against appropriateness of an advisory opinion for issues that are the subject of an ongoing investigation or enforcement action or the subject of an ongoing or planned rulemaking."
 
 
Industry Groups Call for Bipartisan CFPB Commission   
 
A broad coalition of financial and housing industry groups sent a letter of support for a recent bill, S. 3990, that would replace the Consumer Financial Protection Bureau's sole director with a bipartisan, five-member commission. In a letter to Sen. Deb Fischer (R-Neb.), the bill's sponsor, the groups noted that this structure "will provide a balanced and deliberative approach to supervision, regulation and enforcement by encouraging input from all stakeholders."
 
They added that there has long been bipartisan support in Congress for a CFPB five-member commission, with several bills passed by the House with both Democratic and Republican support in recent years. Additionally, the House version of the Dodd-Frank Act that passed in 2009 also envisioned a commission governance structure for the bureau, the groups said.
 
The letter came as the Supreme Court prepares to render a verdict in Seila Law v. the Consumer Financial Protection Bureau, where the question of the bureau's governance structure is a point of discussion.  
 
FED Addressing Coin Shortage
 
The Federal Reserve said it is working on several fronts to mitigate the effects of low coin inventories. The Federal Reserve Banks this week began allocating available supplies of coins to depository institutions to temporarily relieve circulation disruptions caused by the COVID-19 pandemic.
 
Testifying this week before the House Financial Services Committee, Federal Reserve Chairman Jerome Powell said the Fed is working with the reserve banks and the U.S. Mint, though circulation has improved as the economy begins to reopen.
 
The Washington Post reported that the Fed is notifying banks to expect issues with coin orders. According to The Wall Street Journal, a Fed spokesperson said coin deposits from banks are down 50 percent over the past year.
 
 
Model to Consistently Classify Payments Fraud             
 
The Federal Reserve introduced the FraudClassifier model to enable banks and payment providers to classify fraud simply and consistently. The Fed developed the set of tools to help address the industrywide challenge of inconsistent classifications for fraud involving ACH, wire or check payments.
 
The Fed said the model's key advantage is the ability to classify fraud independently of payment type, channel, or characteristics. It said the model can help organizations facilitate consistent fraud information and tracking, improve customer education, understand fraud across payment types and fraud methods, and speak the same language about fraud.
 
Bankers can register for access to educational resources and support tools for the FraudClassifier model.
 

Compliance Conference - September 9 & 10, 2020

Management & Directors Conference - November 10, 2020

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