|October 1 || |
Federal Reserve Board (FRB) extends temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks
The FRB extended temporary actions (to March 31, 2021) aimed at increasing the availability of intraday credit: Per the FRB, these temporary actions include: (1) suspend uncollateralized intraday credit limits (net debit caps) and waive overdraft fees for institutions that are eligible for the primary credit program; (2) permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps); and (3) suspend two collections of information that are used to calculate net debit caps.
|September 30 || |
Federal Reserve Board (FRB) announces it will extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience
Due to the economic uncertainty of the pandemic response, the FRB announced that it will extend certain bank restrictions for the fourth quarter of this year. Large banks—those with more than $100 billion in total assets—will be prohibited from making share repurchases. Dividend payments will also be capped and tied to a formula based on recent income.
|August 11 || |
Federal Reserve Board (FRB) announces revised pricing for its Municipal Liquidity Facility (MLF)
Per the FRB, the revised pricing reduces the interest rate spread on tax-exempt notes for each credit rating category by 50 basis points and reduces the amount by which the interest rate for taxable notes is adjusted relative to tax-exempt notes.
|August 10 || |
Federal Reserve Board (FRB) announces individual large bank capital requirements, which will be effective on October 1
The FRB set CET1 capital requirements, determined in part by stress test results, for each large bank with more than $100 billion in total assets. The CET1 capital requirements are comprised of several components, including:
- Minimum capital requirements, set at 4.5% for each firm;
- The stress capital buffer (SCB) of at least 2.5%; and
- A capital surcharge of at least 1.0% for all global systemically important banks (GSIBs).
Banking organizations can choose to use their capital buffers (i.e. SCB and GSIB surcharge) to lend to households and businesses and undertake other supportive actions. When using their buffers, banking organizations may make capital distributions up to prescribed limits, which include automatic limitations in the capital framework, as well as any additional limitations determined by the FRB. For detailed CET1 capital requirements for all large banks, please see the FRB website.
|July 29 || |
Federal Reserve Board (FRB) announces the extensions of its temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities (FIMA repo facility) through March 31, 2021
FIMA repo facilities were established to ease strains in global dollar funding markets resulting from COVID-19 and mitigate strains on the supply of credit to households and businesses, both domestically and abroad. The FIMA repo facility helps support functioning of the U.S. Treasury market by providing an alternative source of U.S. dollars other than sales of securities in the open market.
The temporary swap lines apply to nine central banks, allowing provisions of up to $60 billion to Australia, Brazil, South Korea, Mexico, Singapore and Sweden, and up to $30 billion to Denmark, Norway and New Zealand. FIMA account holders can continue to temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions.
|July 28 || |
Federal Reserve Board (FRB) announces an extension through December 31 of its lending facilities that were scheduled to expire on or around September 30
The FRB established its lending facilities to combat the economic impact of COVID-19 by enhancing the flow of credit to households, businesses, and state and local governments. Per the FRB, extensions apply to the Primary Dealer Credit Facility, the Money Market Mutual Fund Liquidity Facility, the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Term Asset-Backed Securities Loan Facility, the Paycheck Protection Program Liquidity Facility, and the Main Street Lending Program. Details and eligibility questions for each credit lending facility can be found on the FRB website.
|July 23 || |
Federal Reserve Board (FRB) announces expansion of counterparties in the Term Asset-Backed Securities Loan Facility (TALF), Secondary Market Corporate Credit Facility (SMCCF), and Commercial Paper Funding Facility (CPFF)
The FRB expanded the set of firms eligible to transact with and provide services in three emergency lending facilities. Through this change, the FRB seeks to expand operational capacity and insight into the respective markets by encouraging a broader range of agents for the TALF and counterparties for the CPFF and SMCCF.
|July 21 || |
Federal Reserve Board to maintain the current schedule of prices for most payment services that the Federal Reserve Banks provide to depository institutions in 2021
The FRB announced its intent to keep most 2021 prices flat in order to support the business planning of users and providers of payment services. Per the FRB, this approach recognizes the uncertainties created by the COVID-19 pandemic, and the difficulty in applying standard forecasting tools in this environment. The FRB will issue a final fee schedule notice for payment services later in 2020 to be effective January 2, 2021.
|July 17 || |
Federal Reserve Board (FRB) modifies Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations
Nonprofit organizations will now have greater access to credit from the Main Street Lending Program and its $75 billion in equity provided by the U.S. Treasury Department. The announcement details two new loan options that provide support to non-profits shown to be in sound financial condition prior to the pandemic. Among the eligibility changes per the FRB: The minimum employment threshold for nonprofits was lowered from 50 employees to 10, the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models. Eligible nonprofits must be considered tax-exempt in accordance with IRS code. For a detailed explanation of the modified nonprofit loan options, please refer to the FRB website.
|July 15 || |
Federal Reserve Board (FRB) announces extension of rule change to bolster effectiveness of the Small Business Administration's Paycheck Protection Program (PPP)
On July 4, the President extended the PPP application deadline from June 30 to August 8. The FRB announced that consistent with an April ruling, while the PPP is active, certain bank directors and shareholders can continue to temporarily use their banks for PPP loans for their small businesses. The change only applies to PPP loans. To prevent favoritism, the FRB limits the types and quantity of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their affiliated bank.
|June 29 || |
Federal Reserve Board (FRB) releases new term sheet for the Primary Market Corporate Credit Facility (PMCCF), adding pricing and other information
The PMCFF supports market liquidity and provides credit to qualifying issuers (large employers) of corporate bonds during periods of stress. The FRB added pricing details to the PMCFF term sheet. Pricing will be issuer-specific, informed by market conditions, and subject to minimum and maximum spreads over comparable maturity Treasury securities. Unless extended, the Facility will stop purchasing eligible assets on September 30, 2020.
|June 25 || |
Federal Reserve Board (FRB) releases results of stress tests for 2020 and additional sensitivity analyses conducted in consideration of the coronavirus event
In addition to its normal stress test, the FRB conducted a sensitivity analysis to assess the resiliency of large banks under three hypothetical downside scenarios, which could result from the coronavirus event. Per the FRB, the scenarios included a V-shaped recession and recovery; a slower, U-shaped recession and recovery; and a W-shaped, double-dip recession. In the three downside scenarios, peak unemployment rate projections were significantly more rigorous than the results of the FRB’s pre-coronavirus stress test scenarios. Under the U- and W-shaped scenarios, most firms remain well capitalized but several would approach minimum capital levels.
The FRB took several actions following the results. For the third quarter, the Board is requiring large banks to preserve capital by suspending share repurchases, capping dividend payments to the amount paid in the second quarter and then further limiting dividend payments to an amount based on recent earnings. The FRB is also requiring banks to re-evaluate their longer-term capital plans. All large banks will be required to resubmit and update their capital plans later this year to reflect current stresses. The FRB will conduct analysis each quarter to ensure large banks make appropriate adjustments in response to the requirements.
Results of the full FRB stress tests designed before the coronavirus event were comparable to the V-shaped downside scenario in the sensitivity analysis, in aggregate, and show that all large banks remain strongly capitalized. The FRB will use these results to set the new stress capital buffer requirement for these firms, which will take effect in the fourth quarter.
|June 15 || |
Federal Reserve Board (FRB) announces updates to Secondary Market Corporate Credit Facility (SMCCF), which will begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers
To complement SMCCF’s current indexing approach of purchasing exchange-traded funds and other, eligible broad market index bonds, the Facility will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds. Per the FRB, the index is made up of all the bonds in the secondary market that have been issued by U.S. companies that satisfy the facility's minimum rating, maximum maturity, and other criteria. The Facility (unless extended) will cease all purchasing by September 30, 2020.
|June 15 || |
Federal Reserve Board (FRB) announces it will be seeking public feedback on proposal to expand its Main Street Lending Program to provide access to credit for nonprofit organizations
As with the existing Main Street Lending Program, which targets small and medium-sized businesses, the proposed expansion would offer loans to small and medium-sized nonprofits, that meet the legal requirements of a tax-exempt organization, in need of additional liquidity. Under the proposal, loan terms would be the same as for-profit businesses, with modifications to reflect the operational and accounting practices of the nonprofit sector and include (Per the FRB):
- Minimum of 50 and maximum of 15,000 employees;
- Financial thresholds based on operating performance, liquidity, and ability to repay debt;
- An operational history of at least five years; and
- A limit on endowments of no more than $3 billion.
Feedback may be submitted up until Monday, June 22. Please refer to the FRB website for additional details.
|June 8 || |
Federal Reserve Board (FRB) expands its Main Street Lending Program to allow more small and medium-sized businesses to be able to receive support
The FRB lowered the minimum loan amount from $500,000 to $250,000, raised the maximum loan limit for all facilities (the absolute max limit is $300 million), adjusted the principal repayment schedule to begin after two years (up from one year), and extended the loan term from four to five years. The changes allow for greater participation in the program and provide borrowers with more flexibility in repaying the loans.
The FRB also announced its intention to purchase 95% of each eligible loan that is submitted to the program, provided that the required documentation is complete and the transactions are consistent with the relevant Main Street facility's requirements. The Program will also accept loans that were originated under the previously announced terms, if funded before June 10, 2020. Please refer to the FRB website for additional details regarding the expansion of the Main Street Lending Program.
|June 3 || |
Federal Reserve Board (FRB) announces an expansion in the number and type of entities eligible to directly use its Municipal Liquidity Facility (MLF)
The announcement marked an expansion in the number and type of entities eligible to use the MLF. Two cities or counties eligible from each state can now directly issue notes to the MLF regardless of population. State governors can also designate two issuers whose revenues are generally derived from operating government activities (such as public transit, airports, toll facilities, and utilities) to be eligible to directly use the facility.
The announcement also provided additional details on eligible notes, eligible issuers, security for eligible notes, purchase limitations, pricing, origination fees, prepayment rights, and eligible use of proceeds. Until otherwise noted, the Special Purpose Vehicle (SPV) established by the MLF will cease purchasing Eligible Notes on December 31, 2020.
|May 20 || |
Federal agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency) share principles for offering responsible small-dollar loans
On March 26, federal agencies issued a joint statement encouraging banks, savings associations and credit unions to offer responsible small dollar loans to consumers and small business is response to COVID-19.
On May 20, the agencies released lending principles to cover a variety of small dollar loan structures. According to the agencies, the core lending principles for financial institutions that offer small-dollar loan products include:
- Loan products are consistent with safe and sound banking, treat customers fairly, and comply with applicable laws and regulations.
- Financial institutions effectively manage the risks associated with the products they offer, including credit, operational, and compliance.
- Loan products are underwritten based on prudent policies and practices governing the amounts borrowed, frequency of borrowing, and repayment requirements.
The agencies also provided principles for reasonable loan policies and sound risk management practices and controls that address the following: loan structures, loan pricing, loan underwriting, loan marketing and disclosures, loan servicing and safeguards.
|May 15 || |
Regulators temporarily change the supplementary leverage ratio to increase banking organizations' ability to support credit to households and businesses in light of the coronavirus response
The supplementary leverage ratio generally includes subsidiaries of bank holding companies (BHCs) with more than $250 billion in total consolidated assets. The rule requires them to hold a minimum ratio of 3 percent, measured as the ratio of a depository institution’s tier 1 capital to its total leverage exposure. The temporary modifications permit depository institutions to exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the supplementary leverage ratio, thus providing flexibility to certain depository institutions to expand their balance sheets in order to provide credit to households and businesses. If a depository institution takes advantage of the modification, they must request approval from its primary federal banking regulator before making capital distributions (while the exclusion is in effect). The change is effective through March 31, 2021.
|May 12 || |
Federal Reserve publishes updates to the term sheet for the Term Asset-Backed Securities Loan Facility (TALF) and announces information to be disclosed monthly for the TALF and the Paycheck Protection Program Liquidity Facility (PPPLF)
The TALF helps consumers and businesses meet credit needs at affordable terms by facilitating the issuance of asset backed securities (ABS) via lending support of a special purpose vehicle (SPV). On May 12, the Board announced additional information regarding borrower and collateral eligibility criteria for the TALF, as well as specific guidance on pricing and haircut schedules for ABS sectors, subsectors, and average life. Unless extended, no new credit extensions will be made from the facility after September 30, 2020.
Additionally, each month going forward, the Board will disclose the name of each participant in both TALF and PPPLF; the amounts borrowed, interest rate charged, and value of pledged collateral; and the overall costs, revenues, and fees for each facility in an effort to provide transparency to Congress and the general public.
|May 11 || |
Federal Reserve publishes updates to the term sheet for the Municipal Liquidity Facility (MLF)
Under the MLF, the Federal Reserve Bank of New York supports lending to eligible states, cities and counties through a special purpose vehicle (SPV) that purchases eligible notes directly from eligible issuers at the time of issuance. Effective May 11, 2020, updates to the MLF term sheet provided pricing guidance for issued tax-exempt and taxable notes, as well as other information including guidance on eligible notes, eligible issuers, security for eligible notes, limits, fees, prepayment rights, eligible use of proceeds, and scheduled MLF termination date for SPV purchase of eligible notes (December 31, 2020).
|May 5 || |
Federal bank regulatory agencies modify liquidity coverage ratio for banks participating in Money Market Mutual Fund Liquidity Facility (MMLF) and Paycheck Protection Program Liquidity Facility (PPPLF)
Effective immediately, the federal bank regulatory agencies announced an interim final rule that modifies the agencies' LCR rule. The change supports banking organizations' participation in the Federal Reserve's MMLF and PPPLF in order to support the flow of credit to households and businesses.
The LCR rule requires covered companies to calculate and maintain an amount of high-quality liquid assets (HQLA) sufficient to cover their total net cash outflows over a 30-day stress period. A covered company’s LCR is the ratio of its HQLA amount (LCR numerator) divided by its total net cash outflows (LCR denominator). Absent the interim final rule, covered companies would be required to recognize outflows for MMLF and PPPLF loans with a remaining maturity of 30 days or less and inflows for certain assets securing the MMLF and PPPLF loans. As a result, a covered company’s participation in the MMLF or PPPLF could affect its total net cash outflows, which could potentially result in an inconsistent, unpredictable, and more volatile calculation of LCR requirements across covered companies.
The interim final rule adds a new definition to the LCR rule, “Covered Federal Reserve Facility Funding,” that means a non-recourse loan that is extended as part of the MMLF or PPPLF authorized by the Board requires Covered Federal Reserve Facility Funding and the assets securing such funding to be excluded from the calculation of a covered company’s total net cash outflow amount as calculated under the LCR rule, thus neutralizing LCR impact. The rule does not otherwise alter the LCR or its calibration.
|April 30 || |
Federal Reserve expands access to its Paycheck Protection Program Liquidity Facility (PPPLF) to additional lenders, and expands the collateral that can be pledged
PPPLF facilitates lending to small businesses via the Small Business Administration's (SBA) Paycheck Protection Program (PPP) to help keep workers employed. Following this announcement, all PPP lenders approved by the SBA, including non-depository institution lenders, are now eligible to participate in the PPPLF (formerly, PPPLF did not include non-depository institution lenders). SBA-qualified PPP lenders include banks, credit unions, Community Development Financial Institutions, members of the Farm Credit System, small business lending companies licensed by the SBA, and some financial technology firms.
Additionally, eligible borrowers will be able to pledge whole PPP loans that they have purchased as collateral to the PPPLF by providing the Reserve Bank with qualifying documentation from the SBA.
|April 30 || |
Federal Reserve Board announces it is expanding the scope and eligibility for the Main Street Lending Program
The Federal Reserve Board is expanding the scope and eligibility for the Main Street Lending Program to help credit flow to small and medium-sized businesses in response to public feedback of the original terms. The changes include:
- Creating a third loan option, with increased risk sharing by lenders for borrowers with greater leverage: Under the new loan option (‘Priority Loans’), lenders would retain a 15 percent share on loans that when added to existing debt, do not exceed six times a borrower's 2019 adjusted EBITDA (formerly, lenders retained a 5 percent share on loans with different features);
- Lowering the minimum loan size for certain loans: $500,000 (down from $1,000,000); and
- Expanding Business Borrow Eligibility: Companies with 15,000 employees or up to $5 billion in annual revenue are now eligible (formerly, companies with 10,000 employees and $2.5 billion in revenue were eligible).
In total, three loan options—termed new, priority, and expanded—will be available for businesses (The Board is evaluating a separate approach to meet the unique needs of nonprofit organizations). The chart below summarizes the different loan options:
|April 27 || |
FRB Announces an Expansion and Extension of the Municipal Liquidity Facility
The facility will allow the purchase of notes issued by U.S. counties and cities with the following modified terms:
- Maturity: from 24 months to 36 months from the issuance date
- Eligibility: U.S. counties (from at least five hundred thousand to at least two million residents) and cities (from at least two-hundred fifty thousand to one million residents)
- Termination: extended from September 30, 2020 to December 31, 2020, and
- Rating requirements: eligible issuers must have an investment grade rating as of April 8, 2020 from at least two major nationally recognized statistical rating organizations
|April 24 || |
FRB Announces Interim Rule to Remove Six per Month Limit on Transfers from “Saving Deposits” Definition in Regulation D
Recognizing that financial events associated with the coronavirus pandemic have made access to savings deposits more urgent, the interim rule allows depository institutions to allow their customers to make an unlimited number of transfers and withdrawals from their saving deposits.
|April 23 || |
FRB Announces Temporary Actions Aimed at Increasing the Availability of Intraday Credit Extended by Federal Reserve Banks
In order to provide additional liquidity to the banks, the FRB is temporarily allowing banks to increase the flow on intraday credit collateralized and uncollateralized credit by:a) suspending the uncollateralized intraday credit limit (net caps) and waiving overdraft fees for institutions that are eligible for the primary credit program, andb) permitting a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps)
|April 23 || |
FRB Increases Transparency of its Liquidity Programs
To provide transparency and accountability, the FRB will publish information on monthly basis regarding the institutions using the CARES Act funding, including:
- The names and details of participants in each facility
- Amounts borrowed and interest rate charged; and
- Overall costs, revenues, and fees for each facility
|April 16 || |
FRB Announces its Paycheck Protection Program Liquidity Facility is fully Operational
The FRB announced that this facility is fully operational and available to provide liquidity to eligible financial institutions. This facility was created by the FRB on April 9th, as part of $ 2.3 Trillion in loans to support the economy.
|April 14 || |
Federal Banking Agencies defer appraisals and evaluations for real estate transactions affected by COVID-19
The agencies are deferring certain appraisals and evaluations for up to 120 days after closing of residential or commercial real estate transactions. Transactions involving acquisition, development, and construction of real estate are excluded from this rule. These temporary provisions will expire on December 31, 2020, unless extended by the federal banking agencies.
|April 9 || |
Federal Regulatory Agencies Issue Interim Final Rule for Paycheck Protection Program Facility
The interim final rule modifies the agencies’ capital rules to neutralize the regulatory capital effects on financial institutions participating in the Payment Protection Program Lending Facility (PPPL Facility). The interim final rule confirms that there is zero percent risk weight for the loans granted under the SBA PPP program.
|April 9 || |
FRB Takes Action to Provide up to $2.3 Trillion in Loans to Support the Economy
- Creates the Paycheck Protection Program Liquidity Facility (PPPL Facility) to supply liquidity through term financing to eligible financial institutions that originate PPP loans, taking the loans as collateral.
- Creates the Main Street Lending Program to ensure that credit flows to small and mid-size enterprises with the purchase of up to $600 Billion in loans. This program will provide loans to small and mid-size companies that were in good financial standing before the crisis and that have revenues of up to $ 2.5Billion and up to ten thousand employees. The terms of the loans are up to four years, with principal and interest deferred for one year. Eligible financial institutions will sell ninety-five per cent of the loans to the Main Street Lending Program and retain five per cent. Companies that borrowed funds under the PPP program can also apply for Main Street Loans.
- Increases the liquidity flow to households and business by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as Term Asset-Backed Securities Loan Facility (TALF). These three programs will support up to $850 Billion in credit, backed by $85 Billion in credit protection provided by the Treasury, and
- Help state and local municipalities liquidity by establishing a Municipal Liquidity Facility that will offer up to $500 Billion in lending to states and municipalities. The Treasury will provide $35Billion of credit protection to the FRB for the Municipal Liquidity Facility.
|April 8 || |
FRB Announces that it will Temporarily Modify the Growth Restriction on Wells Fargo so That they Can Provide Additional Support to Small Business
The change will only allow the firm to make additional business loans as part of the Paycheck Protection Program and the Main Street Lending Program.
|April 7 || |
Federal Regulatory Agencies Issue Revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus
The agencies issued revised statements that clarify the interaction between the Interagency Statement issued on March 22, 2020 and the temporary relief provided by Section 4013 of the CARES Act. Section 4013 allows financial institutions to suspend requirements to classify certain loan modifications as Troubled Debt Restructurings (TDRs). The revised statement also provides agency interpretations on past due and non-accrual regulatory reporting of loan modifications and regulatory capital and on consumer protection considerations.
|April 6 || |
FRB will Establish a Facility to Facilitate Lending to Small Business via the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) by Providing Finance Backed by PPP loans.
This week, the FRB will announce additional details.
|April 6 || |
Federal Regulatory Agencies Announce Changes to the Community Bank (CB) Leverage Ratio
The federal bank regulatory agencies announced the issuance of two interim rules to provide temporary relief to CB organizations. The agencies are implementing the Section 4012 of the CARES Act which requires the agencies to temporarily lower the CB leverage ratio to eight percent beginning in the second quarter and for the remainder of 2020, eight and a half (8.5) percent for calendar year 2021, and nine (9) percent thereafter. The interim rule also maintains a two-quarter grace period for a qualified CB organization whose leverage ratio falls no more than 1 per cent below the applicable CB leverage ratio.
|April 3 || |
Federal Regulatory Agencies Encourage Mortgage Servicers to Work with Homeowners Affected by COVID-19
Under the CARES Act, borrowers with a federally backed mortgage who are experiencing financial hardship due, directly or indirectly, to COVID-19, may request forbearance, allowing the borrower to defer mortgage payments for up to 180 days and possibly longer. The agencies also understand that servicers of other mortgages that are not “federally backed mortgage loans” under the CARES Act may be offering similar short-term forbearance to their borrowers under their own programs and under state and local policy initiatives.
|April 2 || |
Federal Regulatory Agencies will consider comments on Volcker Rule modifications
Five federal regulatory agencies announced that they will consider comments before May 1, 2020 on their proposal to modify the Volker Rule’s general prohibition on banking entities’ investing in or sponsoring hedge funds or private equity funds.
|April 1 || |
FRB Announces Temporary Change in the Supplementary Leverage Ratio Calculation
The FRB announced that starting March 31, 2021, the U.S. Treasury Securities and deposits at Federal Reserve Banks will be excluded from the calculation of the Supplementary Leverage Ratio. The FRB expects that the change would temporarily decrease tier 1 capital requirements of holding companies by approximately two per cent in aggregate.
|March 31 || |
FRB will Delay by Six Months the Effective Date for its Revised Control Framework
In order to reduce operational burden for financial institutions, the FRB delayed by six months the effective date of its revised control framework, which is aimed at determining when a company controls another company for purposes of the Bank Holding Company Act.
|March 31 || |
FRB Establishes a Temporary FIMA Repo Facility
The FRB announced the establishment of a temporary repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to support the smooth functioning of financial markets and the U.S. Treasury market. This facility complements U.S. dollar liquidity swap lines that the FRB has established with other central banks.
|March 27 || |
Regulatory Agencies Announce Two Actions Supporting Lending
The first action is with regards to the implementation of the standardized approach for calculating the exposure number of derivative contracts (SA-CCR rule). The implementation was supposed to take place on April 1, 2020. The regulatory agencies to help to improve current market liquidity will permit banking organization to early adopt the SA-CCR for the reporting period ending March 31.
Additionally, the agencies issued an interim rule that allows banking organizations to mitigate the impact of the current expected credit loss (CECL) in their regulatory capital. The banking organizations that are going to implement CECL this year can mitigate the estimated cumulative regulatory capital effect for up to two years. This is in addition to the three-year transition period already in place.
|March 26 || |
FRB Offers Regulatory Reporting Relief to Small Financial Institutions
The FRB recognized that small financial institutions may have experienced staffing priorities due to COVID-19. The FRB will not take actions against these financial institution with less than $5 billion or less in total assets for submitting its March 31, 2020, Consolidated Financial Statements for Bank Holding Companies( FR Y-9C) or Financial Statements of U.S. Non-bank Subsidiaries of U.S. Bank Holding Companies (FR Y-11) after the official deadline, as long the report is submitted within thirty days of the official filing due date.
|March 26 || |
Federal Agencies Encourage Banks, Savings Associations and Credit Unions to Lend Small Amount
Five federal regulatory agencies issued a joint statement encouraging banks, savings associations and credit unions to offer responsible small dollar loans to consumers and small business is response to COVID-19. The loans will comply with applicable laws and regulations and are consistent with the safe and sound practices.
|March 24 || |
FRB Suspends Examination of Financial Institutions in light of coronavirus impact
FRB announces that due to the impact of the coronavirus on financial institutions, it will suspend temporarily its examination activities, with the greatest reduction at the smallest institutions.
|March 23 || |
Creation of Various Funds to Provide Liquidity for Securities Trading and Redemption
- Federal Open Market Committee (FOMC) authorizes the purchase at least $500 Billion of Treasuries and $200 Billion of MBS, including agency issues.
- Treasury Department provides $300 billion in new lending to employers, consumers and business, and $30 Billion in Equity, using Exchange Stabilization Fund (ESG) to these facilities.
- Two facilities to support credit to large employers are created: The Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance with terms of up to four years, and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
- The FRB reestablishes of a third facility, the Term Asset-Backed Securities Loan Facility (TALF). The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.
- The FRB expands Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit.
- The FRB expands the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities. In addition, the pricing of the facility has been reduced.
|March 23 || |
Federal Open Market Committee‘s FED Fund Rate Target
The Federal Open Market Committee (FOMC) instructs the FRB Desk to undertake Federal Open Market Trading Desk Operations as necessary to maintain the FED Fund Rate in a target range of zero to one-quarter per cent. The FOMC also instructs the Desk to include in the System Open Market Holdings comprised of treasury securities and agency mortgage-backed securities(MBS).
|March 23 || |
FRB announces Technical Change in the TLAC
The FRB has announced a technical change to Regulation YY that will amend the definition of eligible retained income for the determination of the Total Loss-Absorbing Capacity (TLAC).
|March 22 || |
Statement Encouraging Financial Institutions to Work with Borrowers affected by COVID-19
Banking regulators remind financial institutions that that not all modifications of loan terms result in a Troubled Debt Restructuring (TDR). Short term modifications made in good faith in response to COVID-19 to borrowers whose loans were current prior to refinancing are not a TDR.
|March 20 || |
Enhance Liquidity for Money Market Mutual Fund Liquidity Facility (MMLF)
To support liquidity in the municipal money markets, the FRB creates the MMLF. The Boston Federal Reserve Bank will now be able to make loans available to eligible financial institutions secured by high quality assets purchased from single state and other tax-exempt municipal money market mutual funds.
|March 20 || |
Coordinate Central Bank Actions to Further Enhance the Provision of U.S. Dollar Liquidity
The FRB had established U.S. Dollar liquidity swap line arrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank. To further enhance the provision of liquidity, the frequency of the issuance of lines of credit has been increased from seven days to daily.
|March 19 || |
Coordinate Central Bank Actions to Further Enhance the Provision of U.S. Dollar Liquidity
The FRB establishes temporary U.S. Dollar liquidity swap line arrangements with the Reserve Bank of Australia, the Banco Central do Brasil, the Danmarks Nationalbank, the Bank of Korea, the Banco de Mexico, the Norges Bank, the Reserve Bank of New Zealand, the Monetary Authority of Singapore and the Sveriges Risksbank.
|March 18 || |
Money Market Mutual Fund Liquidity Facility (MMLF)
The FRB creates the MMLF to assist money market funds with respect to demands for redemption, enhancing overall market functioning and credit provisioning to the broader economy. The money market funds are composed of secured and unsecured commercial paper, agency securities, and treasury securities.
|March 17 || |
Commercial Paper Funding Facility (CPFF)
The FRB also establishes the CPFF to support the flow of credit to investors and households. The CPFF will provide a liquidity backstop for U.S. issues of commercial paper through a special purpose vehicle (SPV), which will purchase unsecured and asset backed commercial paper rated A1/P1 (as of March 17, 2020) directly from eligible companies.
|March 17 || |
Primary Dealer Credit Facility (PDCF)
The FRB establishes the PDCF to allow primary dealers to support smooth market functioning and facilitate credit to business and households. The PDCF will offer overnight and term funding with maturities up to 90 days and will be available for at least six months. Collateral is composed of a broad range of investment grade securities, including commercial paper and municipal bonds, and a broad range of equity securities.
|March 15 || |
Discount Window, Capital and Liquidity Buffers
The FRB releases a statement encouraging banks to use the Federal Reserve “discount window” to continue supporting households and investors. Additionally, the FRB encouraged banks to use their capital and liquidity buffers to lend to households and business affected by the coronavirus.
|March 15 || |
Coordinated Central Bank Action to Enhance U.S. Dollar Liquidity
The FRB, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank agreed to lower the pricing of the Standing U.S. dollar liquidity swap by 25 basis points. In addition, the banks agreed to start offering U.S. dollar liquidity swaps with an 84-day maturity, on a weekly basis in each jurisdiction.