US Agencies (CFPB, FDIC, FED, NCUA, and OCC) extended, until July 01, 2021, the comment period on the request for information on how financial institutions use artificial intelligence, or AI, in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations. The agencies seek comments to better understand the use of artificial intelligence, including machine learning, by financial institutions; appropriate governance, risk management, and controls over artificial intelligence; and challenges in developing, adopting, and managing artificial intelligence. In addition, FED announced the third extension of a rule to bolster the effectiveness of the Small Business Administration's (SBA) Paycheck Protection Program (PPP); this interim final rule will be effective on date of publication in the Federal Register and the comment period on this rule will end 45 days after its publication in the Federal Register.
The extension will temporarily modify the FED rules so that certain bank directors and shareholders can apply to their banks for PPP loans for their small businesses. To prevent favoritism, FED limits the types and quantity of loans that bank directors, shareholders, officers, and businesses owned by these persons can receive from their affiliated banks. However, these limits have prevented some small business owners from accessing PPP loans—especially in rural areas. The SBA clarified last year that PPP lenders can make PPP loans to businesses owned by their directors and certain shareholders, subject to certain limits, and without favoritism. FED's rule extension will allow those individuals to apply for PPP loans, consistent with the SBA rules and restrictions. The rule extension, which is effective immediately, applies to PPP loans made from March 31, 2021 to June 30, 2021. The rule change will continue to apply if PPP is extended, with the change ultimately sunsetting on March 31, 2022.
Comment Due Date: FR+ 45 Days (PPP)/July 01, 2021 (AI Consultation)
Effective Date: FR Publication
Keywords: Americas, US, Banking, SBA, Paycheck Protection Program, PPP, Credit Risk, COVID-19, Artificial Intelligence, FED, US Agencies
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleBoE Recognizes PrivatBank Bail-In by National Bank of Ukraine
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.