FED to Expand Access to PPPL Facility for Additional Qualified Lenders
FED announced that it is working to expand access to its Paycheck Protection Program Liquidity (PPPL) Facility for additional Small Business Administration-qualified lenders as soon as possible. This is being done to facilitate lending to small businesses via the Paycheck Protection Program (PPP) of the Small Business Administration. In addition, FED has announced temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. These temporary actions will be effective on their date of publication in the Federal Register and will expire on September 30, 2020. Finally, FED announced that it will report substantial amounts of information on a monthly basis for the liquidity and lending facilities using Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.
Access to PPPL Facility
Small Business Administration-qualified PPP lenders include depository institutions, such as banks and credit unions, as well as non-depository institution lenders, such as some Community Development Financial Institutions. Currently, only depository institutions are eligible to participate in the PPPL Facility and over 1000 such institutions have already been approved to access the program. The PPPL Facility supports the PPP by extending credit to financial institutions that make PPP loans, using the loans as collateral. The additional liquidity from the PPPL Facility increases the capacity of financial institutions to make additional PPP loans.
Temporary Actions Aimed at Increasing Availability of Intraday Credit
In light of disruptions from the COVID-19 outbreak, depository institutions may face unanticipated intraday liquidity constraints and demands on collateral pledged to the Federal Reserve Banks. In response, FED is adjusting the manner in which the Federal Reserve Banks administer part II of the Policy on Payment System Risk (PSR policy). Specifically, FED is:
- Suspending uncollateralized intraday credit limits (net debit caps) and is waiving overdraft fees for institutions that are eligible for the primary credit program
- Permitting a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps)
FED is suspending two collections of information that are used to calculate net debit caps. FED believes that these actions will not increase credit risk to the Federal Reserve Banks. These temporary actions are intended to support the provision of liquidity to households and businesses and to mitigate the disruptions from COVID-19 outbreak. A list of the frequently asked questions regarding this will be released shortly.
Related Links
- Press Release on Access to PPPL Facility
- Press Release on Temporary Actions Related to Intraday Credit
- Policy Statement on Temporary Actions (PDF)
- Press Release on Information for Liquidity and Lending Facilities
Keywords: Americas, US, Banking, COVID-19, Paycheck Protection Program, Liquidity Facility, Intraday Credit, CARES Act, Federal Reserve Banks, FED
Featured Experts
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
CBUAE on Targeted Economic Support Scheme Amid COVID-19 PandemicRelated Articles
APRA Finalizes Guidance on Management of Climate Change Risks
The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.
European Council Adopts Position on Digital Finance Package Proposals
The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).
PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window
The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.
EC Proposes New Measures Under Capital Markets Union Package
The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.
EBA Publishes Standards to Calculate Risk-Weights of CIUs Under CRR
The European Banking Authority (EBA) published the final report on draft regulatory technical standards for the calculation of risk-weighted exposure amounts of collective investment undertakings or CIUs, in line with the Capital Requirements Regulation (CRR).
FED Outlines Lending Conditions and Supervisory Activities in H1 2021
The Board of Governors of the Federal Reserve System (FED) published a report that summarizes banking conditions in the United States, along with the supervisory and regulatory activities of FED.
APRA Expects Boards to Strengthen Ability to Oversee Cyber Resilience
The Australian Prudential Regulation Authority (APRA) recently completed two pilot initiatives in its 2020-2024 Cyber Security Strategy, which was published in November 2020.
FSB Updates List of Global Systemically Important Banks
The Basel Committee on Banking Supervision (BCBS) published further information related to its 2021 assessment of global systemically important banks (G-SIBs), with additional details to help understand the scoring methodology.
FASB Proposes Improvements to Credit Losses Standard
The Financial Accounting Standards Board (FASB) is consulting on an Accounting Standards Update and the associated taxonomy improvements for requirements on troubled debt restructurings and vintage disclosures under the credit losses standard (for financial instruments) topic 326.
US Agencies Issue Statement on Crypto-Asset Policy Initiatives
US Agencies issued a statement that summarizes the work undertaken during the interagency policy sprints focused on crypto-assets and provides a roadmap of future work related to crypto-assets.
