FED Extends Paycheck Protection Program and Consultation on Use of AI
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.
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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
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