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

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301