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On May 5, 2020, the US federal banking regulators adopted an interim final rule to modify the liquidity coverage ratio (“LCR”) requirement to support banking organizations’ participation in the Federal Reserve Board’s Money Market Mutual Fund Liquidity Facility (“MMLF”) and the Paycheck Protection Program Liquidity Facility (“PPPLF”).[1] The modification is effective immediately, but the regulators have requested comment on whether the modification should be expanded to other types of COVID-19-related stimulus facilities.

Continue Reading US Banking Regulators Modify Liquidity Coverage Ratio for COVID-19 Stimulus Effects

The Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) is now available to non-bank PPP lenders to finance Paycheck Protection Program (“PPP”) loans that they originated or purchased.  While the PPPLF was previously only available to depository institutions to finance PPP loans that they originated, the Federal Reserve revised its eligibility criteria on April 30,

Non-bank lenders providing struggling small businesses a lifeline through forgivable Paycheck Protection Program (“PPP”) loans may soon have access to the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) to support their lending operations. The Federal Reserve issued a term sheet for the PPPLF on April 9, 2020, indicating its intention to provide capital to

On Monday, March 23, 2020, in response to the evolving economic crisis created by the COVID-19 epidemic, US Treasury and the Federal Reserve authorized the establishment of two new facilities to support credit for large employers:

  • The Primary Market Corporate Credit Facility (PMCCF) will provide credit for new bond and loan issuance by directly purchasing

The disruptions in economic conditions caused by COVID-19 are reaching the commercial paper and longer term debt capital markets. The Board of Governors of the US Federal Reserve System has already set into motion three separate facilities as part of its effort to facilitate credit and help alleviate collateral volatility that are expressly available to

On March 22, 2020, the United States Office of the Comptroller of the Currency (OCC) announced an interim final rule effective immediately to revise its short-term investment fund (STIF) rule for national banks acting in a fiduciary capacity.[1] The amendment allows the OCC to authorize banks to temporarily extend maturity limits of STIFs in order to address the market stress caused by the COVID-19 outbreak that is adversely affecting banks’ ability to operate in compliance with maturity limits identified in the STIF rule. While the amendment directly applies to national banks, other managers of STIF may be indirectly affected.[2]

In connection with the announcement of the interim final rule, the OCC announced an order, effecting the amendment to the STIF rule, to extend maturity limits for STIFs affected by COVID-19.[3] Pursuant to the order, a bank will be deemed to be in compliance with the STIF rule if:


Continue Reading US OCC Extends STIF Maturity Limits in Light of COVID-19 Market Conditions

On March 21, 2020 the New York financial services community took note when Governor Cuomo issued an executive order which stated that banks subject to the jurisdiction of the New York Department of Financial Services (“DFS”) who failed to provide forbearance to businesses or consumers experiencing financial hardship would be deemed to be engaging in an “unsafe and unsound” practice.[1] The Governor’s order contemplated additional regulatory guidance from the DFS, and on March 24, the Superintendent of the DFS issued an emergency regulation (the “Emergency Regulation”) to “establish standards and procedures that regulated institutions must follow in their review of requests for relief and determinations to provide financial relief to those experiencing financial hardship, consistent with the purposes of Executive Order 202.9, this regulation and safe and sound practices of the regulated institutions.”[2]

Continue Reading New York DFS Issues Emergency Regulation to Provide Financial Relief to Residential Mortgage Borrowers

On March 17, 2020, as part of an effort to facilitate credit during disruptions in economic conditions caused by COVID-19, the Board of Governors of the Federal Reserve System (Federal Reserve) reestablished a dealer credit facility last operated during the 2008 credit crisis – the Primary Dealer Credit Facility (“PDCF2020”).[1] Available starting on March 20, 2020, PDCF2020 is a loan facility providing credit to primary dealers who in turn are making credit available to businesses and households. As with the Commercial Paper Funding Facility also reintroduced on March 17, the Federal Reserve established PDCF2020 using its powers under Section 13(3) of the Federal Reserve Act for “unusual and exigent circumstances,” which under the Dodd-Frank Act required the approval of Treasury Secretary Steven Mnuchin.[2] PDCF2020 is being administered by the Federal Reserve Bank of New York (“FRBNY”).[3]

Continue Reading US Federal Reserve Reintroduces Primary Dealer Credit Facility in Crisis Effort

On March 18, 2020, the Board of Governors of the Federal Reserve System (“Federal Reserve”) established a facility that will provide liquidity to certain types of money market mutual funds (“MMFs”) by making secured loans to financial institutions that purchase certain assets from MMFs (the Money Market Mutual Fund Liquidity Facility, or “MMLF”).[1] The MMLF is intended to support prime, state and municipal MMFs that experience significant stress in the coming days in the event that investors seek to liquidate MMF shares into cash. This facility is similar to one operated by the Federal Reserve during the 2008 financial crisis but will be available for a wider range of assets. It also builds on efforts taken last week through the launch of the Commercial Paper Funding Facility to purchase unsecured and asset-backed commercial paper rated A1/P1 directly from eligible companies and the Primary Dealer Credit Facility to offer overnight and term-secured funding to primary dealers.[2]

We recommend that financial institutions review the procedures used in connection with the 2008 facility and that MMFs begin discussions with financial institutions regarding liquidity support through the MMLF.


Continue Reading US Federal Reserve Establishes Money Market Mutual Fund Liquidity Facility as Part of COVID-19 Response