The impact of COVID-19 pandemic has resulted in financial institutions and regulators across the globe operating in an entirely new environment. The Financial Action Task Force (“FATF”) has identified the potential risk of criminals exploiting the unprecedented situation through cybercrime, fundraising for fake charities and medical scams, and emphasized the importance of financial institutions’ robust
On April 7, 2020, the US federal banking regulators issued a revised interagency statement (the “Revised Statement”) concerning agency treatment of loan modifications made in response to COVID-19. The Revised Statement updates a prior statement that the regulators issued on March 22, 2020 to (i) address the enactment of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act on March 27, 2020 and (ii) provide greater clarity on whether a modified loan should be classified as a troubled debt restructuring (“TDR”) and the regulators’ enforcement posture with respect to loan modifications. See our Legal Update on the prior statement. A redline of the Revised Statement against the March 22 statement is included at Annex A.
Continue Reading Revised Guidance on Accounting for and Making Loan Modifications
As “stay-at-home” orders have rolled out across the United States, businesses, particularly financial services companies, have scoured definitional provisions to understand whether all forms of financial services companies have been designated as “essential businesses” and therefore exempt from closure requirements. What numerous financial services firms have found is that many categories of the financial services sector tend to be defined as essential businesses, but jurisdictions do not consistently define what is an essential financial services business. As a result, in some cases only banks and insurance companies have been specifically exempted from stay-at-home orders, whereas in other cases, jurisdictions apply and even expand upon the guidance that was issued by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) on March 19, 2020.
The CISA guidance was issued in an effort to provide communities and state governments with an initial list of what constitute “Essential Critical Infrastructure Workers” to ensure continuity of functions critical to public health and safety as well as economic and national security. With respect to financial services, the guidance states that the following workers are considered essential:
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. 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.”
Continue Reading New York DFS Issues Emergency Regulation to Provide Financial Relief to Residential Mortgage Borrowers