The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 12

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 latest edition of The RESPONSE.

U.S. House Passes Paycheck Protection Program and Health Care Enhancement Act

The U.S. House of Representatives passed the Paycheck Protection Program and Health Care Enhancement Act, which appropriates an additional $310 billion to the Paycheck Protection Program (PPP), with $60 billion set aside for issuance by smaller lenders.

PPP FAQs Updated to Clarify Standard for Certifying Necessity of Loans for Large Companies

The FAQs clarifying the rules of the Paycheck Protection Program (PPP) have been updated to include a new FAQ clarifying the standards by which large companies may qualify for PPP loans. While the standard requirement that borrowers be unable to obtain credit through other means has been suspended, borrowers must still certify in good faith that a loan is necessary to support the borrower's continued operations. Although the new FAQ states "it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith," lenders may rely on the certification of a borrower.

Federal Reserve Temporarily Increases Availability of Intraday Credit

The Federal Reserve has taken action to promote the use of intraday credit by healthy financial institutions to support the flow of credit to households and businesses and to mitigate the effects of COVID-19. Among other changes, the Federal Reserve 1) has suspended uncollateralized intraday credit limits, 2) will waive overdraft fees for primary credit program-eligible institutions and 3) will allow streamlined requests for collateralized intraday credit from secondary credit institutions.

Federal Reserve Working to Expand PPP Liquidity Facility

The Federal Reserve has announced that it intends to expand access to the Paycheck Protection Program Liquidity Facility (PPPLF) to additional U.S. Small Business Administration (SBA)-qualified lenders. While PPP lenders include depository and non-depository financial institutions, currently only depository institutions can participate in the PPPLF.

Federal Reserve Announces Plans for Reporting on CARES Act Lending Facilities

The Federal Reserve has announced its intention to report substantial information around the liquidity and lending facilities using Coronavirus Aid, Relief, and Economic Security (CARES) Act funds. Information that will be reported includes: the names and details of facility participants, the amounts borrowed and interest rates charged, and the overall revenues, costs and fees for each facility.

NCUA Amends Capital Adequacy, Member Business Loan and Commercial Lending Regulations

Following the creation of the PPP, the National Credit Union Administration (NCUA) has approved an interim final rule that amends the NCUA's capital adequacy regulations so that PPP loans receive a zero-percent risk weight (as required by the CARES Act) and makes changes ensuring that covered loans can be excluded from the calculation of total assets when determining a credit union's net worth ratio.

Texas Revises Home Equity Lending Guidance for Borrowers Affected by COVID-19

Texas' joint financial regulatory agencies (the Texas Department of Banking, Texas Department of Savings and Mortgage Lending, Texas Office of Consumer Credit Commissioner and Texas Credit Union Department) revised the home equity lending guidance originally published on April 1, 2020. The guidance discusses emergency measures related to existing home equity lines of credit, refinancing of home equity loans, modifications of existing home equity loans and more.

For questions, comments or additional information on any of these areas, please reach out to the Holland & Knight professional with whom you work or one of the following contacts in our Financial Services Industry Group.

About Our Financial Services Industry Group:

Participants in the financial services industry require sophisticated legal counsel to navigate a complex, ever-changing environment and respond to opportunities and challenges as they arise. With more than 300 members throughout the firm, Holland & Knight's Financial Services Industry Group has the depth and experience to effectively serve borrowers and lenders in all of their legal matters, including corporate services, international operations, labor and employment, litigation and dispute resolution, public policy and regulation, real estate and white collar defense. The combination of our thorough knowledge and a sincere commitment to provide responsive service is why clients entrust our team to handle their legal needs.

Holland & Knight has established a COVID-19 Response Team to help clients respond to a variety of business and legal issues they may be facing in this crisis. Please visit Holland & Knight's website for the latest COVID-19 news and updates important to your business.