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 ArticleESMA Group Offers Advice on Proposals on Sustainability Disclosures
The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.
The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.
The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.
The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.
The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).
The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.
The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).
The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.