Featured Product

    FDIC Rule to Mitigate Effects of Participation in Liquidity Programs

    June 22, 2020

    FDIC approved a final rule that mitigates the deposit insurance assessment effects of participating in the Paycheck Protection Program (PPP) established by the U.S. Small Business Administration and the Paycheck Protection Program Liquidity Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF) established by FED. To ensure that the changes are applied to assessments starting in the second quarter of 2020, the final rule will be effective immediately on publication in the Federal Register, with an application date of April 01, 2020. The final rule affects the agencies’ current information collections for Call Reports FFIEC 031, FFIEC 041, and FFIEC 051. FDIC also published a statement from the Chairperson Jelena McWilliams on the final rule.

    The PPP, PPPLF, and MMLF were put in place to provide financing to small businesses and liquidity to small business lenders and the broader credit markets, with the ultimate goal of helping to stabilize the financial system during this time of significant stress. The final rule is intended to ensure that banks will not be subject to significantly higher deposit insurance assessments for participating in these programs. The final rule:

    • Removes the effect of participation in the PPP and borrowings under the PPPLF on various risk measures used to calculate an insured depository institution’s assessment rate
    • Removes the effect of participation in the PPP and MMLF program on certain adjustments to an insured depository institution’s assessment rate
    • Provides an offset to an insured depository institution’s assessment for the increase to its assessment base attributable to participation in the PPP and MMLF
    • Removes the effect of participation in the PPP and MMLF when classifying insured depository institutions as small, large, or highly complex for assessment purposes

    On May 20, 2020, FDIC proposed to mitigate the deposit insurance assessment effects of participating in the PPP, PPPLF, and MMLF programs. In response to the proposal, FDIC received 41 comment letters from depository institutions, depository institution holding companies, trade associations, and other interested parties. Respondents generally supported the proposal, but expressed concerns with certain aspects of the proposal. FDIC considered all comments received and has made some changes in the final rule, while clarified other aspects of the rule that remain unchanged from the proposed rule.

    FDIC will apply the modifications under the final rule in calculating an institution’s deposit insurance assessment based on the items insured depository institution will report on the Call Reports or the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), as applicable, beginning as of June 30, 2020. The changes to the Call Reports, the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks, and their respective instructions have been addressed in a separate Federal Register notice or notices.

     

    Related Links

    Effective Date: Date of Publication in FR

    Keywords: Americas, US, Banking, COVID-19, Paycheck Protection Program, MMLF, PPPLF, Liquidity Facility, Credit Risk, Call Report, Insured Depository Institutions, FED, FDIC

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582