May 7, 2020

The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 17

Holland & Knight Alert
Holland & Knight's Financial Services Industry Group

Like our clients, Holland & Knight's Financial Services Industry Group is committed to actively contributing to our nation's response to the coronavirus (COVID-19) pandemic and related economic fallout and recovery efforts. For our part, Holland & Knight's 300-plus lawyers and professionals who comprise our Financial Services Industry Group want to ensure that bank and non-bank financial institutions, financial intermediaries and other financial services industry participants and stakeholders have access to timely, accurate and succinct updates on federal and state legislative, regulatory and administrative responses to the COVID-19 pandemic that are most relevant to our financial services clients.

To that end, we are pleased to share with you the latest edition of The RESPONSE.

Federal Bank Regulatory Agencies Issue Rule on Participation in Liquidity Facilities

The Office of the Comptroller of the Currency (OCC), Federal Reserve and Federal Deposit Insurance Company (FDIC) issued an interim final rule modifying the liquidity coverage ratio (LCR) for participation in the Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program (PPP) Liquidity Facility. In order to meet short term liquidity needs, the LCR rule requires banks to hold a reserve of high-quality liquid assets. The interim final rule operates to nullify the LCR impact associated non-recourse funding through the facilities.

SBA Makes Economic Injury Disaster Loans Available to Agricultural Businesses

The U.S. Small Business Administration (SBA) has made agricultural businesses eligible for Economic Injury Disaster Loans (EIDL) and EIDL Advances. The EIDL portal has reopened to accept applications on a limited basis. Qualifying agricultural businesses must have 500 or fewer employees and includes those businesses engaged in the legal production of food, ranching and raising of livestock, aquaculture, and other farming and agricultural activities. Holland & Knight is planning a separate alert on this topic.

SBA Extends Safe Harbor Related for PPP Loan Repayments

The SBA has updated its FAQs for Lenders and Borrowers to include a new question 43 that extends the safe harbor period for returning PPP loan funds to May 14, 2020. In addition, a new question 44 deals with how to count foreign employees for purposes of the PPP 500 employee limitation and a new question 45 deals with eligibility for the Employee Retention Credit of businesses that repay PPP loans by the end of the safe harbor period. Holland and Knight has distributed an alert explaining the change presented by question 43 and discussing next steps. (See "Safe Harbor Deadline for Repayment of PPP Loans Extended from May 7 to May 14," May 6, 2020.) Another Holland & Knight alert addresses the foreign employee guidance in question 44. (See "Paycheck Protection Program: Updated Guidance on Counting Employees in Foreign Affiliates," May 6, 2020.)

Banking Regulatory Agencies Extend Resolution Plan Deadlines

The FDIC and Federal Reserve have extended the submission dates for targeted resolution plans from certain large foreign and domestic banks by 90 days to Sept. 29, 2020. The resolution plans, known as living wills, must detail an organization's plan to rapidly and orderly resolve in bankruptcy any distress or failure of the company.

CFPB Issues FAQs to Support Small Businesses Applying for PPP Loans

The Consumer Financial Protection Bureau (CFPB) has issued FAQs clarifying for small businesses the answers to three questions that may arise around the PPP loan application process. Among other things, the FAQs make clear that a PPP loan application is a "completed application" only after the creditor has received a loan number from the SBA or a response on funding availability. The FAQs also provide clarity around creditor responsibilities when denying an application.

24 State Attorneys General Call for Improvements to PPP

The Attorneys General of 24 states have sent a letter to leaders in Congress highlighting certain deficiencies in implementation of the PPP and requesting that any funding extensions to the program address various items such as limiting access to funds to those that need it, providing fair access to funds and ensuring fair distribution, more flexibility in the use of loan funds, and more.

Florida Extends Deadline for Money Transmitter License Renewals

The Florida Office of Financial Regulation has reminded Money Transmitter Part II licensees that they have until June 1, 2020, to renew their licenses. Previously, the licenses were set to expire on April 30, 2020.

For questions, comments or additional information on any of these areas, please reach out to the Holland & Knight professional with whom you work or one of the following contacts in our Financial Services Industry Group.

About Our Financial Services Industry Group:

Participants in the financial services industry require sophisticated legal counsel to navigate a complex, ever-changing environment and respond to opportunities and challenges as they arise. With more than 300 members throughout the firm, Holland & Knight's Financial Services Industry Group has the depth and experience to effectively serve borrowers and lenders in all of their legal matters, including corporate services, international operations, labor and employment, litigation and dispute resolution, public policy and regulation, real estate and white collar defense. The combination of our thorough knowledge and a sincere commitment to provide responsive service is why clients entrust our team to handle their legal needs.

Holland & Knight has established a COVID-19 Response Team to help clients respond to a variety of business and legal issues they may be facing in this crisis. Please visit Holland & Knight's website for the latest COVID-19 news and updates important to your business.

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