On May 13, 2020, the Small Business Administration (“SBA”) released two FAQs, numbers 46 and 47, regarding two safe harbors from an SBA inquiry into a borrower’s statutorily required certification of economic necessity for a loan under the Paycheck Protection Program  (“PPP”).  FAQ 46 states that the SBA will deem any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million to have made the required certification in good faith.  FAQ 47 relates to an existing safe harbor for PPP loans repaid by a specific date; the FAQ extends the deadline from May 14, 2020, to Monday, May 18, 2020.  Accompanying the FAQs was an interim final rule that memorialized an earlier FAQ (number 43) that had set the repayment deadline of May 14.

The net effect of the FAQs is that a borrower that, with its affiliates, has PPP loans of more than $2 million must decide whether to repay the loan by May 18, or to undergo SBA’s review of the good-faith basis for the certification of economic necessity when the borrower’s loan forgiveness application is filed.  The SBA has outlined the nature of its review in only general terms.  Borrowers with PPP loans of $2 million or less are generally safe from such a review.

Continue Reading The PPP Economic Necessity Certification: SBA Provides Additional Guidance

On Tuesday, May 12, 2020, the Board of Governors of the Federal Reserve System (the “Board”) announced additional details regarding the Term Asset-Backed Securities Loan Facility (“TALF”).  The TALF is a financial crisis-era liquidity facility designed to help meet the credit needs of consumers and businesses by facilitating the issuance of asset-backed securities (“ABS”).

Continue Reading Federal Reserve Announces Further Details on TALF

On May 6, the Securities and Exchange Commission (“SEC”) issued an order (“Order”) directing the registered equity exchanges and the Financial Industry Regulatory Authority (“FINRA”) (together, the “Self-Regulatory Organizations” or “SROs”) to submit to the SEC a new National Market System (“NMS”) plan to govern the public dissemination of real-time, consolidated market data for NMS stocks. This new plan would replace the three existing NMS data plans for equities with a single, consolidated plan. Only SROs have voting power on the operating committees for the existing NMS data plans, but the Order directs that the new consolidated plan provide for voting by non-SROs for the first time. The Order discusses at length comments received in response to the Notice of Proposed Order issued by the SEC on January 8, 2020.

Continue Reading SEC Orders Equity Exchanges and FINRA to Submit New Single National Market System Plan for Equity Market Data

Yesterday, the Board of Governors of the Federal Reserve System announced the creation of four new liquidity facilities and the expansion of three previously announced liquidity facilities to provide credit to borrowers impacted by the COVID-19 pandemic. Whereas the previously announced programs primarily targeted certain financial markets and their participants (such as the markets for

Yesterday, March 31, 2020, the Board of Governors of the Federal Reserve System (the “Board”) announced the creation of a temporary repurchase agreement facility for foreign and international monetary authorities (the “FIMA Repo Facility” or the “Facility”) to facilitate liquidity for central banks and other international monetary authorities.  The FIMA Repo Facility is the latest

Yesterday, on Sunday, March 22, 2020, U.S. Senate Republicans released the latest version of their COVID-19-related stimulus bill, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act.  The bill contains several measures intended to provide relief to banks, their customers, and broader financial markets.

The latest version of the CARES Act includes the

Today, March 20, 2020, the Federal Reserve announced that it has amended the terms of its recently announced Money Market Mutual Fund Liquidity Facility (“MMLF”) so as to accept certain U.S. municipal short-term debt as eligible collateral and allow additional types of funds to sell eligible collateral to participating borrowers.  The expansion is intended to support the flow of credit to the economy by taking steps to enhance the liquidity and functioning of crucial state and municipal money markets.
Continue Reading Federal Reserve to Accept U.S. Municipal Short-Term Debt as Eligible Collateral Under Expanded MMLF Program

Today, March 19, 2020, FDIC Chairman Jelena McWilliams sent a letter to the Financial Accounting Standard Board (“FASB”), the body that is responsible for establishing U.S. generally accepted accounting practices (“U.S. GAAP”).  The Chairman’s letter requests that FASB take three specific actions to ease the impact of certain U.S. GAAP standards in light of the economic conditions created by the COVID-19 pandemic.  Specifically, the letter requests that FASB (i) announce that loan modifications offered to borrowers affected by COVID-19 will not be classified as troubled debt restructuring (“TDR”), (ii) provide that banks that are already subject to the current expected credit loss methodology (“CECL”) may postpone CECL implementation, and (ii) delay the ongoing phase-in of CECL.

The three requests are described in more detail below.

Continue Reading FDIC Chairman Asks FASB to Respond to COVID-19 Crisis, Including by Delaying CECL

Yesterday, on March 18, 2020, the Board of Governors of the Federal Reserve System (“Board”) announced the creation of a Money Market Mutual Fund Liquidity Facility (“MMLF”) to provide liquidity support to money market mutual funds (“MMMFs”) by facilitating their sale of certain assets in order to meet redemption requests.  Under the MMLF, the Federal

This week, on March 17, 2020, the Commodity Futures Trading Commission (CFTC) released two announcements (see here and here) regarding a series of no-action letters in response to the ongoing global COVID-19 pandemic.  The CFTC’s announcements come in the wake of high-profile efforts by other financial regulators to quickly address the financial and regulatory