Friday's News

July 30, 2021

This week, a sharp increase in infections from Covid’s Delta variant in some parts of the county spurred new recommendations at the federal, state, and local levels. The SBA said it will provide direct PPP forgiveness for smaller loans. Tomorrow, the federal government’s eviction moratorium is set to expire. In New York, DFS released a data collection plan in furtherance of Diversity, Equity & Inclusion goals for the industry.

State Regulatory Developments

• Through an industry letter, New York State Department of Financial Services Superintendent Linda Lacewell unveiled an initiative to promote diversity, equity and inclusion in the financial institutions regulated by the Department. The first step announced in the initiative is to collect data from banking institutions under $100 million that is related to the gender, racial and ethnic composition of boards or equivalent body and senior management. In a statement to Bloomberg News, NYBA President & CEO Clare Cusack noted the Department’s tempered and judicious approach, collecting level setting data before promulgating regulatory requirements and leveling the playing field early by including nonbanks, adding “New York’s banking industry recognizes the proven value and importance of diversity, equity and inclusion efforts and representative leadership, both of which are critical to meeting the needs of the mosaic of communities and customers we serve and celebrate.” The Department lauded in its materials NYBA’s educational programming and member resources on DE&I issues. See NYBA’s full statement here.

   

• Governor Cuomo announced a new streamlined application process for New York's rent relief program that relaxes documentation standards for both tenants and landlords and implements a streamlined process for submission of arrears documentation for multi-tenant landlords. The new process went into effect on July 27 with a promise that payments will begin to flow on August 3.  The CFPB has also launched a tool to help consumers find their local rental assistance distributors, which includes information on the seven communities in New York that opted to administer their own programs including the City of Rochester and Monroe County, the City of Yonkers, Onondaga County and the towns of Hempstead, Islip and Oyster Bay on Long Island.

Other State Developments

• At this writing, there are now 13 counties in New York State with sufficient increases in COVID infection rates to be subject to the CDC’s most updated guidance on mask wearing for fully-vaccinated people. Earlier this week, Governor Cuomo released an update on State infection and hospitalization rates by County. New York City Mayor Bill DeBlasio expects to make an announcement on Monday regarding potential new requirements. New York City also announced a $100 prepaid card incentive for anyone who gets a first vaccine dose at a New York City-run vaccine location with access and information through available here.
  
  
• A group of New York landlords has appealed to the US Supreme Court to block a state moratorium on residential evictions put in place at the start of the COVID-19 pandemic. A federal district court dismissed the landlords’ challenge, and the U.S. Court of Appeals for the 2nd Circuit rejected the landlords’ request to put the moratorium on hold while they appeal. The landlords argue that the State has lifted its Emergency Executive Order and that the eviction ban should be lifted as well. The moratorium is set to end on August 31, 2021. 

Federal Legislative Developments

• The House Financial Services Committee approved H.R. 4616, a Libor transition bill that would provide a safe harbor for market participants switching existing Libor-referencing financial contracts over to SOFR for debt instruments like floating-rate corporate bonds whose terms cannot easily be changed because they require all parties to agree. New York State has already enacted a similar bill to address contracts with New York choice of law provisions.
  
  
• The House Financial Services Committee considered H.R. 4590, the Promoting New and Diverse Depository Institutions Act, which would mandate a regulatory study on the challenges of hopeful depository institutions obtaining de novo bank charters.

Federal Regulatory Developments

• The FHFA announced new eviction protections for tenants of Fannie Mae- and Freddie Mac-backed properties. Tenants being evicted for non-payment of rent must be given 30 days’ notice.
  
  
• The SBA issued guidance on its new initiative designed to encourage borrowers with PPP loans of $150,000 or less to apply for direct loan forgiveness. The SBA will begin accepting applications from borrowers through its portal on August 4. The streamlined process will be open only to borrowers with loans of $150,000 or lower and whose lender has signed up to participate. Lenders may sign up through this portal.
  
  
• New federal COVID-19 relief measures to help struggling homeowners avoid foreclosure were announced by The White House. HUD is offering advanced mitigation tools, payment options, and loan modification programs for FHA-insured mortgages. The USDA and VA have programs for significantly reducing monthly P & I payments.
  
  
• The federal banking agencies are proposing call report changes meant to clarify the reporting of deferred tax assets.The clarifications were necessary because of a proposed rule on tax allocations agreements. There are also changes related to calculating the exposure amount of derivative contracts.
  
  
• The CFTC kicked off its “SOFR First” initiative for changing trading conventions from Libor to SOFR. In a related action, the Alternative Reference Rates Committee (ARRC) formally recommended CME as the administrator for the Secured Overnight Financing Rate (SOFR). This is seen as an important step in the continuing transition away from Libor.
  
  
• The OCC has created the position of Climate Change Risk Officer and appointed large bank supervisor Darrin Benhart to the post, which will focus on promoting climate-related risk management. The OCC also announced that it had joined the Network of Central Banks and Supervisors for Greening the Financial System.
  
  
• The Treasury Department is allowing certain eligible employers to claim tax credits for providing paid time off to employees for taking a household or family member for a COVID vaccine or to care for such a person suffering vaccination aftereffects.

Resources

• NYPD Shield, in collaboration with the U.S. Cybersecurity and Infrastructure Security Agency, has issued a report detailing the top 30 cyber vulnerabilities and exposures.
  
  
• The OCC published two frequently asked questions concerning the regulatory capital treatment of capital instruments whose terms reference the London Interbank Offered Rate (Libor). The Federal Reserve and the FDIC issued similar FAQs.
  
  
• The CFPB has created foreclosure-related communications resources for mortgage servicers working with borrowers who may not be proficient in English.
  
  
• The Conference of State Bank Supervisors published model state regulatory prudential standards for nonbank mortgage servicers.

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