US Agencies Finalize Interim Final Rules Issued Amid Pandemic
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year. One of the final rules temporarily defers appraisal and evaluation requirements for up to 120 days after the closing of certain residential and commercial real estate transactions. This final rule will become effective on its publication in the Federal Register and will expire on December 31, 2020. Another final rule neutralizes—due to the lack of credit and market risks—the regulatory capital and liquidity effects for banks that participate in certain Federal Reserve liquidity facilities. The effective date for this final rule is December 28, 2020.
Final Rule on Real Estate Appraisals
The final rule temporarily deferring appraisal and evaluation requirements is substantially similar to the interim final rule issued in April 2020. The final rule adopts deferral of the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate. The final rule makes one revision to the interim final rule. In response to the comments received on the interim final rule, the final rule clarifies that transactions for the acquisition, development, and construction of real estate excluded from the 120-day deferral period mean, for purposes of this rule, the loans that are described in the Call Report Instructions for Schedule RC-C, “Loans and Lease Financing Receivables,” Part I, "Loans and Leases," item 1.a, “Construction, land development, and other land loans.”
Final Rule on Treatment of Certain Emergency Facilities in Regulatory Capital and Liquidity Coverage Ratio (LCR) Rules
US Agencies are adopting the revisions made to the regulatory capital rule and the LCR rule under three interim final rules published in March, April, and May 2020. The agencies are adopting these interim final rules as final with no changes. Under this final rule, banking organizations may continue to neutralize the regulatory capital effects of participating in the Money Market Mutual Fund Liquidity Facility (MMLF) and the Paycheck Protection Program Liquidity Facility (PPPLF) and are required to continue to neutralize the LCR effects of participating in the MMLF and the PPPLF. In addition, Paycheck Protection Program loans will receive a zero percent risk-weight under the agencies’ regulatory capital rules. The final rule will support the flow of credit to households and businesses affected by the coronavirus event.
In connection with the interim final rules, FED temporarily revised the financial statements for holding companies (FR Y-9 reports) and the complex institution liquidity monitoring report (FR 2052a); it also invited comment on proposals to revise and extend these collections of information for three years. FED has extended the FR Y-9 and FR 2052a for three years, with revision, as originally proposed. Additionally, in connection with the interim final rules, the agencies made revisions to the call reports, the report of assets and liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), and the regulatory capital reporting for institutions subject to the advanced capital adequacy framework (FFIEC 101). The changes to the call reports, FFIEC 002, and FFIEC 101 and their related instructions have been addressed in a separate Federal Register notice.
Related Links
- Press Release
- Final Rule on Real Estate Appraisals (PDF)
- Federal Register Notice on Treatment of Emergency Facilities
Effective Date: FR Publication Date/December 28, 2020
Keywords: Americas, US, Banking, Securities, COVID-19, Real Estate Appraisals, Credit Risk, Residential Real Estate, MMLS, Paycheck Protection Program, LCR, Regulatory Capital, Reporting, FR Y-9C, FR 2052A, Call Reports, Basel, US Agencies
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
BIS Paper Studies Impact of Fintech Lending on Small Businesses in US
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
EBA Launches EU-Wide Transparency Exercise in 2022
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
EC Rule Lists Advanced Economies for Market Risk Capital Calculations
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
