BPInsights: April 25, 2020

BPInsights: April 25, 2020

Top of the Agenda

$310 Billion Extension to Paycheck Protection Program Signed into Law

This week, Congress passed an additional $310 billion in Paycheck Protection Program (PPP) funding, with $60 billion set aside for financial institutions with assets under $50 billion. President Trump signed the bill into law on Friday afternoon. During House consideration of the bill, there was an unsuccessful effort to allow remote voting by members. Additional relief is being sought by Democrats, including Speaker Pelosi and Minority Leader Schumer. Senate Majority Leader McConnell has called for a “pause” casting doubt on the ability to push through another significant spending package. The Treasury Department and the Small Business Administration (SBA) announced on Friday that the SBA will resume accepting PPP loan applications on April 27. Learn More >>

5 Stories Driving the Week

1. Consumer and Banking Industry Organizations Call on Congress to Exempt Economic Impact Payments from Garnishment

BPI joined a coalition of other banking industry organizations and consumer groups, led by the National Consumer Law Center, to advocate on behalf of legislative change to how garnishments were treated under the CARES Act. In a joint letter sent to congressional leadership on April 21, the coalition remarked:

While financial institutions and even many debt collectors and debt buyers believe that the payments should be exempt from garnishment orders, some creditors have continued to attempt to garnish and freeze bank accounts. Banks are obligated to comply with garnishment orders unless lifted by a court. Yet many consumers do not know that they may have a legal defense to those orders under state exemption laws or for other reasons, and the crisis has also made it difficult to impossible to access attorneys or the courts – presenting due process issues. The lack of clear, self-executing protection for the stimulus payments imposes a significant burden for some families facing unprecedented circumstances.

Many banks have implemented measures of their own to waive overdrafts and implement temporary credits to assist customers with otherwise negative balances by giving them access to the full funds distributed under the CARES Act. The letter that was submitted by the coalition reiterates requests submitted to Congress by BPI and other financial services trade organizations on April 15, demonstrating the ongoing dialogue between banks, consumers and elected officials to meet the expectations and needs of consumers. Learn More >>

2. Federal Reserve Eliminates 6-Per-Month Limit on Savings Account Transfers

The Federal Reserve issued an interim final rule (IFR) on April 24 removing limits on certain kinds of transfers and withdrawals that may be made each month from the definition of “savings deposit” in the Board’s Regulation D. The change, which authorizes institutions to permit unlimited transfers and withdrawals from savings accounts, was implemented for two reasons. First, in light of the Federal Reserve’s elimination of reserve requirements on transaction accounts, the limits were no longer necessary to distinguish between transaction accounts and saving deposits. Second, the change will assist businesses and households in responding to financial challenges as a result of COVID-19. The IFR also institutes conforming changes to other definitions in Regulation D and includes a series of frequently asked questions to address its impact. The Fed is requesting comments within 60 days from the date of publication in the Federal Register. Learn More >>


3. Banks Weigh Operational Strategies for a Post-COVID-19 World

Banks and companies worldwide are wading through a wide swath of operational and cultural challenges as they try and figure out what “business as usual” looks like after the worst pandemic in a century, according to news reports this week.

Fifth Third is just one of many banks weighing new models for bank branches, including a move to small property sizes, retention of drive-through windows and the possible installation of walk-up windows at inner-city branches, according to an American Banker report. Companies have graffitied lobbies and sidewalks across America with signs and markers reminding customers to maintain six-foot social distancing measures. Acrylic window shields, often known as “bandit barriers,” once intended to ward off would-be robbers have taken on a new role to protect employees and customers against the transmission of germs.

Outside of physical branch considerations, digital banking products might benefit from additional upgrades and funding as banks experience increased online traffic and adoption of mobile banking and other digital products. Bank of America reported a 10 percent increase in Q1 2020 active digital banking users from the prior quarter, and Citizens Financial Group committed to maintaining plans to further develop additional digital options.

In the boardroom, Citigroup hosted its first-ever virtual annual shareholder meeting on April 21 and was joined by Bank of America, JPMorgan and U.S. Bancorp, just to name a few. Following the meeting, Board Chairman John Dugan stated that the company would evaluate the “pluses and minuses” of the practice, indicating that it may remain a viable option going forward.

As healthcare professionals and government officials provide guidance leading up to a return to normalcy, additional opportunities to protect employees and customers may be identified. In the interim, banks are taking proactive and responsible measures to safely meet the needs of their communities.

4. Fed Announces Temporary Actions to Increase Availability of Intraday Credit

The Federal Reserve announced on April 23 new temporary efforts to ease intraday liquidity constraints on banks. The actions will remain in effect until September 30, 2020, and include suspending uncollateralized intraday credit limits, waiving overdraft fees for institutions eligible to participate in the primary credit program, making it easier for secondary credit institutions to access collateralized intraday credit. In short, the actions will allow financially sound U.S. depository institutions and U.S. branches and agencies of foreign banks unlimited and free access to uncollateralized daylight credit. Learn More >>

5. 30 Percent of Cyberspace Solarium Commission Recommendations Expected in 2021 NDAA, Estimates Commission Co-Chair

The Cyberspace Solarium Commission — a bicameral, bipartisan commission made up of legislators, executive agency leaders and nationally recognized experts tasked with developing strategies to defend U.S. cyberspace — convened a virtual event this week to continue consideration of legislative proposals for inclusion in the 2021 National Defense Authorization Act (NDAA), a federal law that establishes the budget and expenditures for the Department of Defense. In his remarks, Commission co-chair, Representative Mike Gallagher (R-WI), estimated that he expects about 30 percent of the recommendations proposed in the Commission’s March 2020 report will be included in the NDAA for full congressional consideration. BPI’s priority to support financial sector intelligence needs is among those being considered for inclusion. The NDAA is one of the few bills Congress reliably passes each year and is expected to be enacted in December. Learn More >>


In Case You Missed It

FHFA Eases Restrictions on Fannie and Freddie to Bolster Mortgage Market Liquidity

The Federal Housing Finance Agency (FHFA) will temporarily ease some of Fannie Mae’s and Freddie Mac’s (the “Enterprises”) forbearance restrictions according to an announcement by the agency on April 22. The FHFA is authorizing the Enterprises to acquire previously ineligible single-family mortgages that have fallen into delinquency or forbearance.

Loans acquired through FHFA programs are processed through mortgage originators, such as a bank, before being sold to the Enterprises. When a new homeowner becomes delinquent or requests a forbearance before a loan is transmitted, the Enterprises can no longer acquire that loan under current rules. The originator is then forced to retain the loan, which detracts from the originator’s ability to offer additional home loans to other potential buyers.

The announcement by the FHFA will temporarily resolve this problem and will help to bolster liquidity in the mortgage markets by enabling mortgage originators to continue lending.



FSB Identifies 7 Strategies to Prepare for and Recover from Cyberattacks

The Financial Stability Board (FSB) released a consultative document titled “ Effective Practices for Cyber Incident Response and Recovery” on April 20, recommending seven strategies that companies and regulators could implement to plan for, and recover from, a cyber incident. The FSB began developing what it describes as a “toolkit” in 2018. As indicated in the report, a major cyber incident could result in serious disruptions to the financial system and a decline in consumer confidence.

The seven strategies were developed based on survey responses by national authorities, international organizations and external stakeholders, and covers governance, preparation, analysis, mitigation, restoration, improvement, and coordination and communication.



U.S. Secret Service and Treasury Launch Campaign to Help Consumers Identify Fraudulent Treasury Checks

The U.S. Secret Service and U.S. Department of Treasury launched a new campaign on April 20 called “Know Your U.S. Treasury Check,” intended to educate consumers, retailers and financial institutions on methods of detecting counterfeit U.S. treasury checks and avoiding scams. The awareness initiative offers quick tips on how to recognize genuine security features and is a timely response to recent reports that the first batch of physical Economic Impact Payment checks are en route to American households.



Wells Fargo Discusses Responsible Data Sharing on American Banker Podcast

Wells Fargo’s Head of Digital Payments, Ben Soccorsy, joined Penny Crosman on a recent American Banker podcast to discuss how Wells Fargo is developing and implementing protocols to secure customer data in the age of third-party consumer applications and fintech partnerships. Soccorsy discussed the bank’s investments in developing secure application program interfaces (APIs) to give consumers greater control over where their data is being shared, and whether customers want their data shared with certain services. As part of the development of these APIs, Soccorsy emphasized the utility of data-sharing agreements, including the Financial Data Exchange (FDX), which is a nonprofit organization made up of financial companies and fintechs working together to establish best practices for data aggregation, including a standard API across the financial services industry.


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