On April 6, 2020, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (collectively, the “federal banking agencies”) announced the issuance of two interim final rules to provide temporary relief to community banks. The federal banking agencies acted to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which requires the federal banking agencies to temporarily lower the community bank leverage ratio (“CBLR”) to eight percent (8%).
On March 24, 2020, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued a statement on its supervisory activities (“Statement”) during the unprecedented COVID-19 pandemic. As part of that Statement, the Federal Reserve indicated that “to minimize disruption and burden on financial institutions, the Federal Reserve is reducing its focus on examinations and inspections at this time.” In its effort to minimize the regulatory burdens placed on financial institutions, the Federal Reserve made the following pronouncements:
Over the past two weeks, we have received numerous inquiries from financial institutions on what actions should be taken or considered to address the COVID-19/Coronavirus pandemic. While every bank is different and the current situation is evolving each day, we have engaged in numerous discussions with banks on various strategies and considerations that are being reviewed or implemented during this uncertain time.
On March 14, 2020, the U.S. House of Representatives, with the support of the President, overwhelmingly approved a bill known as the Families First Coronavirus Response Act (H.R. 6201). The legislation is scheduled to be taken up by the U.S. Senate during the week of March 16th, and is expected to be signed into law promptly by the President once the legislation is finalized.
This bulletin focuses on those aspects of the legislation approved by the House that address (1) emergency paid sick leave and paid leave under the Family and Medical Leave Act (“FMLA”) and (2) zero cost coverage for COVID-19 testing.
Important Note: Changes may be made to the legislation approved by the House before it is signed into law, as a technical correction bill is expected in the House, and the Senate has indicated that it may make changes. This bulletin summarizes the provisions of the bill initially approved by the House on March 14th.
Employer Provided Paid Sick Leave
The legislation affects private employers employing fewer than 500 employees and government employers (“Covered Employers”), and provides for (1) two weeks of emergency paid sick leave and (2) additional paid sick leave under the FMLA. Private employers employing 500 or more employees are not Covered Employers and the legislation does not require such employers to provide paid sick leave to their employees.
Over the past two weeks, the international markets have been roiling under news that the COVID-19 virus, commonly referred to as the coronavirus, may be spreading. The Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau (collectively, the “Federal Bank Regulators”) have not issued specific guidance or released public statements outlining their expectations for responding to issues arising from the spread of the coronavirus. However, financial institutions should consider the potential impact (if any), including any regulatory impact, the coronavirus may have on institutions. Below are considerations that should be discussed by boards of directors and senior management. Continue Reading Coronavirus: Considerations for Financial Institutions