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
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates
The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.
FSB Reports Assess NBFI Sector and Progress on LIBOR Transition
The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.
