The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 1

The RESPONSE

Like our clients, Holland & Knight's Financial Services Industry Group is committed to actively contributing to our nation's response to the coronavirus (COVID-19) pandemic and related economic fallout and recovery efforts. For our part, Holland & Knight's 300-plus lawyers and professionals who comprise our Financial Services Industry Group want to ensure that bank and non-bank financial institutions, financial intermediaries and other financial services industry participants and stakeholders have access to timely, accurate and succinct updates on federal and state legislative, regulatory and administrative responses to the COVID-19 pandemic that are most relevant to our financial services clients. To that end, we are pleased to share with you the first edition of The RESPONSE. Here is what you can expect from The RESPONSE:

• Timely updates focused specifically on issues that matter most to the financial services industry
• Accurate weekly summaries of relevant material federal and state developments
• A succinct, user-friendly format that boards of directors, senior executives and business line leaders can leverage to inform their real-time decision-making in a fluid, dynamic environment

The RESPONSE from The Hill:

Senate Passes $2 Trillion Coronavirus Spending Billl; House Expected to Follow

The Senate overwhelmingly passed a $2 trillion stimulus package on March 25 to provide economic support during the COVID-19 pandemic. The House is expected to approve the measure on March 27, and the President said he will sign the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) as soon as it gets to his desk. Virtually every operating company in the United States will be eligible for a loan, guarantee or other form of liquidity, whether through a forgivable loan or low-interest financing options. Banks and primary dealers will be the main distributors of support, the CARES Act may be a source of important fee income. Look for more developments in the upcoming issues of The RESPONSE.

The RESPONSE from Federal Regulatory Agencies:

OCC Guides Essential Infrastructure Workers in Financial Services Sector

On March 25, the OCC issued guidance to essential infrastructure works in the Financial Services Sector.

The Federal Reserve Alters Bank Examinations

On March 24, the Federal Reserve announced that it is temporarily cutting back on its bank examinations, particularly for companies with assets less than $100 billion, and is providing banks more time to resolve any outstanding non-critical supervisory findings.

Encouraging Loan Modifications

On March 22, federal financial institution regulatory agencies and the Conference of State Bank Supervisors issued a joint interagency statement reinforcing their position that financial institutions should use short-term loan modifications to work with borrowers who cannot meet payment obligations because of the effects of COVID-19. The agencies will jointly host a webinar on Friday, March 27, on this topic.

Expanding Opportunities for Community Reinvestment Act (CRA) Credit

On March 19, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC) and Federal Reserve issued a Joint Statement on CRA Consideration for Activities in Response to COVID-19, reinforcing that retail banking and lending activities representing prudent efforts to modify loan terms for, or ease terms for new loans to, low- and moderate-income individuals, small businesses and small farms affected by COVID-19 will receive favorable CRA consideration, as will community development activities.

The Commodity Futures Trading Commission (CFTC) Speaks – Commodities and Swaps

The CFTC has issued a series of no-action letters providing "temporary, targeted relief to a variety of market participants across a wide spectrum of activities related to the swap and commodity markets, including futures commission merchants and introducing brokers, swap dealers, retail forex dealers, floor brokers, members of designated contract markets and swap execution facilities, swap execution facilities, designated contract markets and CPOs.

The RESPONSE from the States:

States with Stay-at-Home Orders or Orders Closing or Limiting "Non-Essential" Businesses

Several states have issued stay-at-home orders or executive orders mandating statewide closures of "non-essential" businesses, including Colorado, Connecticut, Delaware, Hawaii, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, North Carolina, Ohio and Virginia. Financial services businesses frequently are exempted from these requirements, but the scope of these exemptions varies among states.

States Mandate Forbearances, Accommodations and Fee Waiver

On March 16, California Gov. Gavin Newsom issued an Executive Order requesting that financial institutions implement an immediate moratorium on foreclosures and related evictions. On March 22, the California Department of Business Oversight (DBO) encouraged financial institutions operating in California to waive certain fees (ATM, overdraft, late payments and early withdrawal penalties), ease certain restrictions and offer payment accommodations to affected depositors and borrowers.

On March 24, the New York State Department of Financial Services (DFS) issued a new emergency regulation, which applies at least until April 20, 2020, requiring New York-regulated financial institutions to provide residential non-agency mortgage forbearance on property located in New York state for a period of 90 days to any individual residing in New York who demonstrates financial hardship as a result of the COVID-19 pandemic. The new regulation also requires that New York-regulated banking organizations eliminate ATM fees, overdraft fees and credit card late payment fees for any individual who demonstrates financial hardship as a result of the COVID-19 pandemic.

Other states issued similar proclamations:

• Colorado Gov. Jared Polis issued an Executive Order limiting, among other things, foreclosures.
• Iowa Gov. Kim Reynolds signed a proclamation suspending all foreclosures on residential, commercial, and agricultural real property
• Kansas Gov. Laura Kelly issued an Executive Order temporarily prohibiting all financial institutions operating in Kansas from initiating any mortgage foreclosure efforts or judicial proceedings until May 1, 2020.

California Provides Guidance on Temporary Branch Closures and Virtual Board and Shareholder Meetings

On March 22, the California DBO issued guidance for financial institutions that may need to temporarily close a facility due to staffing challenges or to take precautionary measures related to COVID-19. In addition, the DBO noted that it will not criticize banks that conduct meetings virtually without obtaining 100 percent consent from shareholders.

Evolving State Laws on Remote Online Notarizations (RONs)

Prior to the COVID-19 pandemic, more than 20 states adopted legislation in place that starts the process of regulation of RONs. Some states have recently enacted emergency measures allowing for RONs. These states include Connecticut, New Hampshire and New York.

For questions, comments or additional information on any of these areas, please reach out to the firm's professionals with whom you work, or if you are new to the firm please call or email one of the professionals listed in the relevant subject area.

DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed may change on a daily basis. Please contact your responsible Holland & Knight lawyer for timely advice.