The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 4

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.

Federal Reserve Announces Temporary Change to Supplementary Leverage Ratio

On April 1, the Federal Reserve announced a temporary change to its supplementary leverage ratio rule. The change would exclude U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of the rule for bank holding companies, and will be in effect until March 31, 2021.

Federal Regulators Clarify Interaction Between CECL Interim Final Rule and CARES Act

On March 31, the Federal Reserve, OCC and FDIC issued a joint statement clarifying the interaction between the CARES Act statutory relief from Current Expected Credit Loss Standards (CECL) compliance (until either Dec. 31, 2020, or when the president declares the national crisis to be over) and the agencies' interim final rule issued on March 27 regarding a five-year CECL transition for regulatory capital purposes.  

CFPB Issues Statement on FCRA Supervision and Enforcement

On April 1, the Consumer Financial Protection Bureau (CFPB) issued a policy statement to reinforce furnisher responsibilities and to inform credit reporting agencies and furnishers that the CFPB is adopting a flexible supervisory and enforcement approach regarding Fair Credit Reporting Act (FCRA) compliance. Further, the CFPB expects furnishers to comply with the sections of the CARES Act that amend the FCRA and generally require furnishers to report as current those credit obligations that have received payment accommodations as a result of the effects of COVID-19.

Federal Reserve Delays Implementation of Bank "Control" Framework

The Federal Reserve Board postponed the implementation of its revised "control" framework until Sept. 30, 2020, in order to lessen institutions' operational burdens and enable them to focus on current economic conditions.

DOJ Issues Reminder on Servicemember Protections

The Civil Rights Division of the U.S. Department of Justice (DOJ) has issued a statement highlighting challenges that servicemembers face due to the U.S. Department of Defense's stop movement order issued on March 13. The DOJ is encouraging property managers/owners to work with servicemembers facing residential lease issues due to receiving the stop movement order after having already made plans to move pursuant to previous new duty station orders. The DOJ also is encouraging employers to be cognizant of their responsibilities under the Uniformed Services Employment and Reemployment Rights Act, Servicemembers Civil Relief Act and similar state laws.

Mortgage Bankers Association (MBA) Seeks Emergency Call Exception to TCPA

The MBA joined other industry trade groups to send a letter requesting an expedited declaratory ruling from the FCC. The letter seeks an exception to the Telephone Consumer Protection Act (TCPA) allowing mortgage servicing calls and other financial institution notices using automatic dialing systems or prerecorded/artificial voice messages for matters related to COVID-19 (e.g., making customers aware of relief programs, branch closures and limited hours) under the premise that such calls are made for emergency purposes.

Federal and State Agencies Open to Waiving Environmental Enforcement Obligations

In a memo dated March 26, the U.S. Environmental Protection Agency (EPA) announced that it would waive enforcement of the obligation to comply with certain environmental requirements if violations of those obligations were caused entirely or partially by the pandemic. On April 1, the Pennsylvania Department of Environmental Protection (DEP) released guidance for private parties to apply for a temporary suspension of the obligation to satisfy a specified obligation as a result of the pandemic. These types of agency actions are important for lenders considering the environmental obligations of their borrowers during the COVID-19 pandemic, or the environmental obligations which a lender may assume if the lender were to foreclose upon a contaminated site facing certain environmental obligations. The Pennsylvania DEP form can be found on the state agency's website in the "Requesting Suspension of Regulation or Permit Condition" section.

Pennsylvania Attorney General Launches Consumer Relief Initiative

On March 31, Pennsylvania Attorney General Josh Shapiro announced the Pennsylvania CARE Package, an initiative whereby financial institutions and banks offer additional assistance to Pennsylvanians facing COVID-19 related hardship. The assistance available includes, among others: expanded availability of small and medium business loans, a 90-day grace period for mortgages not already covered by the CARES Act's 180-day grace period, a 90-day grace period for other consumer loans, and a 60-day moratorium on foreclosures, evictions and vehicle repossessions.

New York Insurance Regulator Provides Relief for COVID-19 Hardships

On March 30, the New York Department of Financial Services adopted emergency regulations allowing consumers facing hardship due to COVID-19 to defer paying life insurance premiums for 90 days, as well as allowing consumers and small businesses to defer paying property and casualty insurance premiums for 60 days. The regulations provide further guidance, including how the deferred payments may be repaid and information about fee waivers.

California Facilitates Financial Relief Package

California has enlisted the help of financial institutions to provide relief to consumers struggling with the COVID-19 crisis by providing mortgage payment forbearance for 90 days, halting negative credit reporting for customers seeking COVID-19-related relief, imposing a 60-day moratorium on foreclosure and eviction initiations, and waiving certain fees.

California Gov. Issues Executive Order Authorizing Virtual Shareholder Meetings

On March 30, California Gov. Gavin Newsom issued an Executive Order that, among other things, facilitates California corporations conducting virtual annual meetings of shareholders that have already been scheduled or that must occur by June 30, 2020.

Illinois Suspends Motor Vehicle Repossessions

On March 28, Illinois announced it had suspended provisions of the Uniform Commercial Code and the Illinois Vehicle Code regarding vehicle repossession for the duration of the Illinois Gubernatorial Disaster Proclamation.

Evolving State Laws on Remote Online Notarizations (RONs)

Alabama and Colorado have joined the growing number of states that have recently enacted emergency measures allowing for RONs. Legislation related to RONs is pending in other states. See a previous alert by Holland & Knight's RON Team with an accounting of related legislative and emergency order statuses throughout the country.

An Updated List of State and Local Nonessential Business and Stay-at-Home Orders

U.S. state and local governments continue to issue new orders regarding closure of nonessential businesses and sheltering at home. Understanding and keeping track of these requirements is important to all businesses. To assist, Holland & Knight has created state-by-state summaries of the major executive orders, mandates and proclamations, as well as links to the official documents. The summaries are updated daily.

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.