Friday's News

President Joseph R. Biden, Jr. was sworn into office this week as our 46^th U.S. President. Making history, Vice President Kamala Harris became the first woman ever to hold that post, when she was sworn in by Supreme Court Justice Sonia Sotomayor (New Yorker!). Once the new members of the Senate were sworn in, New Yorker Chuck Schumer became Senate Majority Leader. Here at home, Governor Cuomo presented a budget proposal amidst a significant deficit that he hopes will be resolved through federal aid.

State Legislative Developments

• The Governor delivered his Executive Budget address for fiscal year 2022 on Tuesday and released legislative language for his Executive Budget outlining details of his policy proposals for this legislative session and the fiscal outlook for NY. The next step in the budget process is to convene legislative budget hearings, as the State Legislature reviews the proposal and advances their own budget proposals in the coming months. A final budget is due by April 1, 2021. The Governor’s Executive Budget proposal includes the following banking-related proposals:
• Extension of Residential Mortgage Forbearance Covered Period in Banking Law section 9-x through December 31, 2021
• Extension of Commercial Eviction & Foreclosure Moratorium through May 1, 2021
• LIBOR Discontinuance & Transition Language for New York contracts
• New York Data Accountability & Transparency Act with Gramm-Leach-Bliley Act exception
• Legalization of Adult Use Recreational Cannabis and Taxation Provisions
• Permanent Electronic Notarization
• Paid Leave for COVID-19 Vaccination

• Among the bills that moved this week:
• The Senate passed S.471A (Kaplan) “The COVID-19 Emergency Protect Our Small Businesses Act of 2021,” which protects commercial tenants and certain commercial owners/mortgage holders from eviction, foreclosure, and tax lien sales through May 1, 2021. This bill is substantially similar to the residential eviction and foreclosure protections noted below which NYBA continues to focus on, passed by the legislature and signed into law in December 2020. While there is currently no sponsor in the Assembly, NYBA is monitoring developments in the Assembly. NYBA will continue to keep members updated.

• A.1972 (Williams)/S.885 (Comrie), which contains amendments to the law passed last year relating to the definition of tenants requiring notice in a mortgage foreclosure action. This bill moved through the Assembly Judiciary Committee and is on the floor in the Assembly. The bill is also on the floor in the Senate.

• Among the bills on Committee agendas next week:
• On the Senate Banks Committee agenda -

-S.134 (Mayer)/A.240 (Zebrowski), which establishes certain limitations on bank accounts after the account has been closed. The bill is currently assigned to the Assembly Banks Committee.

-S.166 (Gianaris), which requires transmitters of money to provide a certain warning to consumers. There is currently no sponsor in the Assembly.

-S.671 (Sanders)/A.1935 (Perry), which requires a single point of contact for modifying delinquent home loans. The bill is currently assigned to the Assembly Banks Committee.

-S.1015 (Benjamin) which prohibits state chartered banking institutions from investing in and providing financing for private prisons. There is currently no sponsor in the Assembly.

-S.1566 (Sanders) which requires banks to disclose any negative consequences an alternative loan payment schedule may have on credit scores. There is currently no sponsor in the Assembly.

• NYBA remains focused on provisions of A.11181 (Dinowitz)/S.9114 (Kavanagh), “The COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020,” which contains measures to protect renters and residential property owners from eviction, foreclosure, and tax lien sales through May 1, 2021. While NYBA is not opposed to the intent in protecting consumers as well as preventing fraud, we have raised several questions with legislative and Executive stakeholders regarding its implementation and some of the language offered.  NYBA primarily focused on issues that would affect extending future credit and attracting investment in New York. NYBA will keep our members updated on developments, and thanks those members who have shared their comments and analysis with us.

Other State Developments

• The Governor provided information on the status of the COVID-19 vaccination phases and timeline for New Yorkers as vaccines continue to be distributed to regions across the State, highlighting issues with vaccine supply limitations.
  • Phase 1a, which includes frontline healthcare workers and congregate facility residents and staff, remains underway. Phase 1b is also underway, with vaccination dependent on vaccine availability within their region. The list of individuals eligible to receive the vaccine under Phase 1b has been expanded to include individuals 65 years and older, teachers and education workers, first responders, public safety workers, corrections officers, college professors, and public transit workers among others. NYS has not identified any phases beyond Phase 1a and Phase 1b

     

  • NYBA continues to monitor the impact of the Centers for Disease Control and Prevention’s recommendations issued in December identifying financial services workers to be included in Phase 1c of COVID-19 vaccinations as the State determines further categorization of banking employees as essentials workers to receive the vaccine. The Department of Health’s COVID-19 Vaccine webpage contains additional information on the availability and process for the identified vaccination phases.

     

  • NYBA continues to monitor developments on additional identified phases for the vaccine including bank employees and has been in contact with the Department of Financial Services regarding a timeframe for distribution to the financial services industry. Updates will be provided as they become available on NYBA’s Reopening Resources webpage.

   

• The Empire State Development Corp. continues to provide updated information on NY Forward, which encompasses the phased reopening of the NYS regions. While all regions of NYS are in Phase 4, certain restrictions and protocols remain in place for specific industries and identified micro-cluster zones across NYS. Maps identifying the current micro-cluster zones in NYS are available here.

   

• An updated chart of all coronavirus banking related activity specific to New York State is available on our website.  The chart continues to be updated on a regular basis.

Federal Legislative Developments

• Even before the Inaugural ceremony, a Senate confirmation hearing was held for Janet Yellen, President Biden’s nominee for Treasury Secretary. The former Chair of the Federal Reserve is widely expected to win confirmation. During the hearing, Ms. Yellen focused on the need for additional COVID-related relief and stimulus, and pledged new initiatives regarding climate change.
  
  
• House Financial Services Committee Chair Maxine Waters (D-CA) announced the Democrats who will serve on the Committee in the 117^th Congress. There are five New Yorkers, all from New York City. They are U.S. Reps. Carolyn Maloney, Nydia Velazquez, Greg Meeks, Ritchie Torres, and Alexandria Ocasio-Cortez.
  
  
• Rep. Carolyn Maloney (D-Manhattan) introduced a bill, H.R. 334, to provide law enforcement agencies investigating the January 6th attack on the U.S. Capitol with the authority to require a company to disclose the beneficial owners of the company in its review.  The bill is similar to legislation just passed by Congress in December to require such disclosures generally, but moves up the effective date of the new law for this specific purpose only.   

Federal Regulatory Developments

• The Paycheck Protection Program reopened to all lenders this week. On Sunday evening, the Small Business Administration released new guidance on calculating the maximum loan amounts for first-draw PPP loans and what documentation is required for different types of businesses. For those lenders with assets under $1 billion that had already begun issuing loans prior to this guidance, the guidance states that "the U.S. government will not challenge lender PPP actions that conform to this guidance and to the PPP Interim Final Rules and any subsequent rulemaking in effect at the time the action is taken."   

In addition, the SBA released two procedural notices. The first notice is for lenders assisting borrowers in resubmitting loan forgiveness applications using the simplified Form 3508S if they had already applied using earlier forms. The second notice relates to good-faith errors made either by borrowers or lenders that result in loan amounts exceeding the eligible maximum.

Late Tuesday, the SBA released revised Paycheck Protection Program loan forgiveness forms, as well as a new interim final rule on forgiveness and a new borrower disclosure on conflict of interest, pursuant to requirements of the latest CARES Act. The rule reflects program changes in recent guidance, such as the hold harmless provision for lenders who rely on borrower certification and documentation, and an updated list of payroll and non-payroll costs that are eligible for forgiveness. SBA released a new Form 3508S, which is a streamlined forgiveness application for all PPP loans of $150,000 or less. Additional revised forms are 3508 and 3508EZ.

• The FHFA has extended through February 28 its moratorium on foreclosures and real estate owned evictions for single-family mortgages backed by Fannie Mae or Freddie Mac.
  
  
• The Biden White House issued a memo directing executive departments and agencies to halt any pending regulations not yet published in the Federal Register, as is customary for new Administrations. It is unclear which, if any, banking-related regulations still in the pipeline are impacted by this directive.
  
  
• President Biden announced his intention to nominate Rohit Chopra to lead the CFPB. (Bureau Director Kathy Kraninger resigned earlier this week.) During the Obama Administration, Mr. Chopra played a significant role in the creation of the Bureau, and later served as its student loan ombudsman.
  
  
• Gary Gensler, former Chairman of the CFTC who crafted several rules implementing the 2010 Dodd-Frank Act, is President Biden’s pick to Chair the Securities Exchange Commission. Michael Barr is expected to be nominated as Comptroller of the Currency. Mr. Barr served as Assistant Treasury Secretary for Domestic Finance during the Obama Administration, where he too was instrumental in the development of Dodd-Frank rules.
  
  
• The Internal Revenue Service issued guidance on the tax information reporting of COVID-related relief and subsidies. Importantly, the guidance confirms that PPP forgiveness, Treasury loan forgiveness, and EIDL grants are not considered reportable income.
  
  
• The Internal Revenue Service will delay the start of tax filing season until February 12, citing ongoing systems work related to Economic Impact Payments (EIP).
  
  
• The FHFA is exploring climate change and natural disaster risk on the federal housing finance system. It has issued a Request for Information , with responses due by April 19.
  
  
• The CFPB finalized a rule that exempts certain higher-priced mortgage loans from the Reg Z requirement to establish escrow accounts. The rule will go into effect 120 days after its publication in the Federal Register.
  
  
• The federal banking agencies each (OCC, FDIC, CFPB) issued final rules codifying that supervisory guidance does not have the force and effect of law, as a result of a petition by the American Bankers Association and Bank Policy Institute.
  
  
• The FDIC Board has approved significant changes to its appeals process related to material supervisory determinations.

Resources

• The CFPB has published a guide to help small entities comply with new third-party debt collection rules.
  
  
• FinCen has issued new FAQs that regulatory clarify expectations regarding Suspicious Activity reporting and other AML issues. Notably, the FAQs contain no new requirements.