Regulatory Developments
In response to the current crisis, the Federal Reserve has issued a number of rules and statements to support the flow of credit and liquidity and ease operational burden, including
- Encouraging use of capital and liquidity buffers. The Federal Reserve and the other federal banking agencies issued a statement encouraging banking organizations to use their capital and liquidity buffers to serve households and businesses, and additional frequently asked questions to clarify the statement. The federal banking agencies also issued interim final rules to ensure automatic capital distribution restrictions phase in gradually, as intended.
- Delaying the impact of the CECL accounting standard in capital rules. To ease operational burden, the Federal Reserve Board and the other federal banking agencies issued a CECL final rule to allow firms to mitigate the estimated impact of the CECL accounting methodology on capital for up to two years. Following the enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the Federal Reserve Board and the other federal banking agencies issued a joint statement to clarify the interaction between the CECL interim final rule and the CARES Act for purposes of regulatory capital requirements.
- Temporarily adjusting supplementary leverage ratio requirements for holding companies. On a temporary basis, the Federal Reserve Board adopted an interim final rule to exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio requirement for holding companies to ease strains in the Treasury market resulting from the current crisis.
- Encouraging firms to participate in Federal Reserve liquidity facilities. The federal banking agencies adopted an interim final rule to neutralize the regulatory capital effects of participating in the Money Market Mutual Fund Liquidity Facility (MMLF) and Paycheck Protection Program Liquidity Facility (PPPLF) to encourage participation in the facilities.
- Allowing early adoption of counterparty credit risk measures in the capital rules. To improve market operations and smooth disruptions, the federal banking agencies allowed for early adoption by certain banking organizations of a new methodology for measuring counterparty credit risk in derivative contracts.
- Temporarily reducing the community bank leverage ratio requirement. Consistent with the CARES Act, the banking agencies adopted two interim final rules to provide temporary relief to community banking organizations. The two rules modify the community bank leverage ratio framework so that: a banking organization with a leverage ratio of 8 percent or greater that meets certain other criteria may temporarily elect to use the community bank leverage ratio framework; and community banking organizations will have until January 1, 2022, before the community bank leverage ratio is re-established at 9 percent.
- Removing the six transfer limit on savings deposits. To improve the access that consumers have to their funds and to simplify account administration for banks, the Board removed the six-per-month limit on convenient transfers from the "savings deposit" definition in Regulation D.
For a comprehensive list of Federal Reserve or interagency rulemakings and statements related to the current crisis, see table 2.
Table 2. Federal Reserve or interagency rulemakings/statements (COVID-19 related)
| Date issued | Rule/guidance |
|---|---|
| 3/9/2020 | Agencies encourage financial institutions to meet financial needs of customers and members affected by coronavirus: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200309a.htm |
| 3/10/2020 | SR 20-3 / CA 20-2: Interagency Statement on Pandemic Planning: https://www.federalreserve.gov/supervisionreg/srletters/SR2003.htm |
| 3/13/2020 | SR 20-4 / CA 20-3: Supervisory Practices Regarding Financial Institutions Affected by Coronavirus: https://www.federalreserve.gov/supervisionreg/srletters/SR2004.htm |
| 3/16/2020 | Federal banking agencies encourage banks to use Federal Reserve discount window: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200316a.htm |
| 3/17/2020 | Federal banking agencies provide banks additional flexibility to support households and businesses: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200317a.htm SR 20-5: Questions and Answers (Q&As) on Statement Regarding the Use of Capital and Liquidity Buffers (March 19, 2020): https://www.federalreserve.gov/supervisionreg/srletters/sr2005.htm |
| 3/22/2020 | Agencies provide additional information to encourage financial institutions to work with borrowers affected by COVID-19: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200322a.htm |
| 3/23/2020 | Federal Reserve Board announces technical change to support the U.S. economy and allow banks to continue lending to creditworthy households and businesses: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200323a.htm |
| 3/24/2020 | Federal Reserve provides additional information to financial institutions on how its supervisory approach is adjusting in light of the coronavirus: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200324a.htm |
| 3/26/2020 | Federal Reserve offers regulatory reporting relief to small financial institutions affected by the coronavirus: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200326b.htm Federal agencies encourage banks, savings associations, and credit unions to offer responsible small-dollar loans to consumers and small businesses affected by COVID-19: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200326a.htm |
| 3/27/2020 | SR 20-6: Identification of Essential Critical Infrastructure Workers in the Financial Services Sector During the COVID-19 Response: https://www.federalreserve.gov/supervisionreg/srletters/SR2006.htm Agencies announce two actions to support lending to households and businesses: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200327a.htm |
| 3/30/2020 | SR 20-7 / CA 20-5: Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19: https://www.federalreserve.gov/supervisionreg/srletters/SR2007.htm |
| 3/31/2020 | SR 20-9: Joint Statement on Interaction of the Regulatory Capital Rule: Revised Transition of the CECL Methodology for Allowances with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act: https://www.federalreserve.gov/supervisionreg/srletters/SR2009.htm Federal Reserve Board announces it will delay by six months the effective date for its revised control framework: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200331a.htm |
| 4/1/2020 | Federal Reserve Board announces temporary change to its supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200401a.htm |
| 4/2/2020 | Agencies will consider comments on Volcker rule modifications following expiration of comment period: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200402a.htm |
| 4/3/2020 | Federal agencies encourage mortgage servicers to work with struggling homeowners affected by COVID-19: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200403a.htm |
| 4/6/2020 | SR 20-10: Small Business Administration (SBA) and Treasury Small Business Loan Programs: https://www.federalreserve.gov/supervisionreg/srletters/SR2010.htm Agencies announce changes to the community bank leverage ratio: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200406a.htm |
| 4/7/2020 | Agencies issue revised interagency statement on loan modifications by financial institutions working with customers affected by the coronavirus: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200407a.htm |
| 4/8/2020 | Federal Reserve Board announces, due to the extraordinary disruptions from the coronavirus, that it will temporarily and narrowly modify the growth restriction on Wells Fargo so that it can provide additional support to small businesses: https://www.federalreserve.gov/newsevents/pressreleases/enforcement20200408a.htm |
| 4/9/2020 | Federal bank regulators issue interim final rule for Paycheck Protection Program Facility: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200409a.htm Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy: https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm |
| 4/14/2020 | Federal banking agencies to defer appraisals and evaluations for real estate transactions affected by COVID-19: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200414a.htm |
| 4/24/2020 | Federal Reserve Board announces interim final rule to delete the six-per-month limit on convenient transfers from the "savings deposit" definition in Regulation D: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200424a.htm |
| 4/27/2020 | Agencies extend comment period on updates to resolution plan guidance for large foreign banks: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200427a.htm |
| 4/30/2020 | Federal Reserve Board announces the public comment period has been extended through June 4, 2020, for the notice by Morgan Stanley of New York, New York, to acquire E*TRADE Financial Corporation of Arlington, Virginia: https://www.federalreserve.gov/newsevents/pressreleases/orders20200430a.htm |
| 5/1/2020 | Federal Reserve Board finalizes rule to extend by 18 months the initial compliance dates for certain parts of its single-counterparty credit limit rule: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200501a.htm |
| 5/5/2020 | Federal bank regulatory agencies modify liquidity coverage ratio for banks participating in Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200505a.htm |
| 5/6/2020 | Agencies extend two resolution plan deadlines: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200506a.htm |
Table 3 provides a comprehensive list of Federal Reserve or interagency rulemakings/statements issued over the past 12 months other than those related to the current crisis.
Table 3. Federal Reserve or interagency rulemakings/statements (proposed and final)
| Date issued | Rule/guidance |
|---|---|
| 5/9/2019 | Federal Reserve approves final rule to repeal regulations that incorporated the Secure and Fair Enforcement for Mortgage Licensing Act.
Federal Reserve Board press release: |
| 5/30/2019 | Agencies issue final rule regarding the treatment of certain municipal obligations as high-quality liquid assets.
Interagency press release: |
| 6/17/2019 | Agencies issue final rule to streamline regulatory reporting requirements and commit to further review of reporting burdens for small institutions.
Interagency press release: |
| 6/21/2019 | Federal Reserve Board releases results of supervisory bank stress tests.
Federal Reserve Board press release: |
| 6/27/2019 | Federal Reserve releases results of Comprehensive Capital Analysis and Review (CCAR).
Federal Reserve Board press release: |
| 7/9/2019 | Agencies issue final rule to simplify regulatory capital rules.
Interagency press release: |
| 7/12/2019 | Agencies propose rule on the capital treatment of land development loans.
Interagency press release: |
| 7/17/2019 | Agencies announce coordination of reviews for certain foreign funds under the Volcker rule.
Interagency press release: |
| 7/22/2019 | Agencies and FinCEN improve transparency of risk-focused Bank Secrecy Act/anti-money-laundering supervision.
Interagency press release: |
| 7/26/2019 | Agencies complete resolution plan evaluations and extend deadline for certain firms.
Interagency press release: |
| 9/27/2019 | Agencies issue final rule to exempt residential real estate transactions of $400,000 or less from appraisal requirements.
Interagency press release: |
| 10/2/2019 | Agencies issue final rule to update management interlock rules.
Interagency press release: |
| 10/8/2019 | Agencies finalize changes to simplify the Volcker rule.
Interagency press release: |
| 10/10/2019 | Federal Reserve Board finalizes rules that tailor its regulations for domestic and foreign banks to more closely match their risk profiles.
Federal Reserve Board press release: |
| 10/17/2019 | Agencies seek comment on proposed interagency policy statement on allowances for credit losses and proposed interagency guidance on credit risk review systems.
Interagency press release: |
| 10/18/2019 | Agencies request information on use and impact of CAMELS ratings.
Interagency press release: |
| 10/28/2019 | Agencies finalize changes to resolution plan requirements as part of EGRRCPA. The rules maintain requirements for the largest firms and reduce requirements for smaller firms.
Interagency press release: |
| 10/28/2019 | Agencies invite comment on proposal to amend swap margin rules.
Interagency press release: |
| 10/29/2019 | Agencies issue final rule to simplify capital calculation for community banks (community bank leverage ratio).
Interagency press release: |
| 11/08/2019 | Board invites public comment on proposal to extend by 18 months initial compliance dates for foreign banks subject to its single-counterparty credit limit rule.
Federal Reserve Board press release: |
| 11/19/2019 | Agencies finalize changes to supplementary leverage ratio as required by EGRRCPA.
Interagency press release: |
| 11/19/2019 | Agencies finalize rule to update calculation of counterparty credit risk for derivative contracts.
Interagency press release: |
| 12/3/2019 | Agencies clarify requirements for providing financial services to hemp-related businesses.
Interagency press release: |
| 12/13/2019 | Federal Reserve Board announces it will extend until January 22, 2020, comment period for its proposal to establish risk-based capital requirements for certain insurance companies supervised by the Board.
Interagency press release: |
| 12/17/2019 | Agencies find no deficiencies in resolution plans from the largest banks; find shortcomings for several firms.
Interagency press release: |
| 12/20/2019 | Agencies extend deadline on request for information on CAMELS rating system.
Interagency press release: |
| 12/20/2019 | Agencies extend comment period for proposed rule to amend swap margin rules.
Interagency press release: |
| 1/30/2020 | Federal Reserve finalizes rule to simplify and increase the transparency of the Board's rules for determining control of a banking organization.
Interagency press release: |
| 1/30/2020 | Agencies propose changes to modify Volcker rule "covered funds" restrictions.
Interagency press release: |
| 1/31/2020 | Shared National Credit Review finds risk remains elevated in leveraged loans.
Interagency press release: |
| 3/4/2020 | Federal Reserve Board approves rule to simplify its capital rules for large banks, preserving the strong capital requirements already in place.
Federal Reserve Board press release: |
Box 2. Crisis-Related Outreach by the Federal Reserve
Since the end of March, the Federal Reserve has used a variety of outreach mechanisms to share information about the System's response to the current crisis. The topics of the outreach were
- Federal Reserve Response to COVID-19
- Federal Economic Impact Payments and Ordering Cash in a COVID-19 Environment: Information Bankers Need to Know
- The Federal Reserve's Efforts to Provide Term Financing to Facilitate Lending to Small Businesses Via the Small Business Administration Paycheck Protection Program
- COVID-19 Update: New Transition Provisions to Delay the Impact of CECL on Regulatory Capital
- Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus