Agencies Will Consider Comments on Volcker Rule Modifications Following Expiration of Comment Period

News Release 2020-47 | April 2, 2020

Joint Release

Board of Governors of the Federal Reserve System
Commodity Futures Trading Commission
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Securities and Exchange Commission

Five federal financial regulatory agencies on Thursday announced that they will consider comments submitted before May 1, 2020, on their proposal to modify the Volcker rule’s general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as “covered funds.”

The agencies will continue to consider comments to provide interested persons more time to analyze the issues and prepare their comments in light of potential disruptions resulting from the coronavirus. The proposal asked for comments to be submitted by April 1, 2020.

The agencies will continue to work together on policy issues as the coronavirus pandemic unfolds.

Media Contacts

Federal Reserve Board Eric Kollig (202) 452-2955
CFTC Office of Public Affairs (202) 418-5080
FDIC David Barr (202) 898-6992
OCC Bryan Hubbard (202) 649-6870
SEC Office of Public Affairs (202) 551-4120

New SBA and Treasury Programs Available for Small Business Relief

FIL-33-2020
April 2, 2020

New SBA and Treasury Programs Available for Small Business Relief

Printable Format:

FIL-33-2020 – PDF (PDF Help)

Summary:

The FDIC is advising financial institutions of multiple forms of relief available in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to small businesses through programs administered by the Small Business Administration (SBA). The U.S. Department of the Treasury (Treasury) also offers small business loan programs. The FDIC encourages financial institutions to consider using these programs in a prudent manner as they actively work with small business borrowers with less financial flexibility to weather near-term operational challenges due to the Coronavirus Disease 2019 (referred to as COVID-19).

Statement of Applicability to Institutions under $1 Billion in Total Assets: This Financial Institution Letter (FIL) applies to all FDIC-supervised institutions.

Highlights:

  • The FDIC encourages financial institutions to consider the relief available to small businesses through new programs administered by the SBA, and more fully described at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.
  • These SBA programs include:
    • The Economic Injury Disaster Loan program under Section 7(b) of the Small Business Act, which provides funds to small businesses to cover economic injury resulting from the disaster, such as a loss of revenue; and
    • The Paycheck Protection Program, which provides loans to encourage certain qualified small businesses to retain employees through the COVID-19 pandemic and includes loan forgiveness subject to certain conditions.
  • The SBA is streamlining its processes to enable more financial institutions to use these programs for small business borrowers affected by COVID-19.
  • Beginning April 3, 2020, the FDIC will post on our Coronavirus (COVID-19) webpage updated program information from the SBA for financial institutions that want to learn how to access its new programs.
  • Information regarding the Treasury’s small business loan programs is available at https://home.treasury.gov/policy-issues/small-business-programs.
  • The FDIC will not criticize financial institutions’ good faith efforts to prudently use the SBA and Treasury programs to work with small business borrowers affected by COVID-19.

Treasury and IRS Release FAQs to Help Small and Midsize Businesses Navigate Paid Sick and Family Leave Tax Credits

 WASHINGTON – The U.S. Department of the Treasury and the Internal Revenue Service are offering small and mid-size employers more information on refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing their employees paid sick and family leave wages related to COVID-19.

“The financial strain American businesses are experiencing is not their fault,” said Secretary Steven T. Mnuchin. “These tax credits for small and mid-size businesses will cover the cost of providing paid sick and family leave wages, which will help protect the health of American families and businesses during this unprecedented time.”

The Families First Coronavirus Response Act (FFCRA), signed by President Trump on March 18, 2020, gives businesses with fewer than 500 employees funds to provide employees with paid sick leave and family and medical leave related to COVID-19.

Eligible employers can receive a credit in the full amount of the qualified sick leave and family leave wages paid for between April 1, 2020, and December 31, 2020. 

Employers can be reimbursed immediately by reducing their federal employment tax deposits.  If there are insufficient federal employment taxes to cover the amount of the credits, employers may request an accelerated payment from the IRS.

Read more information on small and mid-size business tax credits for paid sick and family leave.

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Social Security Recipients Will Automatically Receive Economic Impact Payments

WASHINGTON – The U.S. Department of the Treasury and the Internal Revenue Service today announced that Social Security beneficiaries who are not typically required to file tax returns will not need to file an abbreviated tax return to receive an Economic Impact Payment. Instead, payments will be automatically deposited into their bank accounts. 

 

“Social Security recipients who are not typically required to file a tax return do not need to take an action, and will receive their payment directly to their bank account,” said Secretary Steven T. Mnuchin. 

 

The IRS will use the information on the Form SSA-1099 and Form RRB-1099 to generate $1,200 Economic Impact Payments to Social Security recipients who did not file tax returns in 2018 or 2019. Recipients will receive these payments as a direct deposit or by paper check, just as they would normally receive their benefits.

 

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FTC Sues to Unwind Altria’s $12.8 Billion Investment in Competitor JUUL

Today, the Federal Trade Commission filed an administrative complaint (a public version of which will be available and linked to this news release as soon as possible) alleging that Altria Group, Inc. and JUUL Labs, Inc. entered a series of agreements, including Altria’s acquisition of a 35% stake in JUUL, that eliminated competition in violation of federal antitrust laws.

“For several years, Altria and JUUL were competitors in the market for closed-system e-cigarettes. By the end of 2018, Altria orchestrated its exit from the e-cigarette market and became JUUL’s largest investor,” said Ian Conner, Director of the Bureau of Competition. “Altria and JUUL turned from competitors to collaborators by eliminating competition and sharing in JUUL’s profits.”

The FTC alleged that as competitors, Altria and JUUL monitored each other’s e-cigarette prices closely and raced to innovate. Altria also leveraged its ownership of leading brands across tobacco categories to secure favorable shelf space at retailers throughout the United States, the complaint alleges. Although early competition resulted in Altria’s MarkTen e-cigarette becoming the second most popular brand by market share, by late 2018, JUUL vaulted past the industry leaders Altria and Reynolds to become the leading e-cigarette company in the country.

The Commission alleges that Altria dealt with this competitive threat by agreeing not to compete in return for a substantial ownership interest in JUUL. Weeks after Altria declared its intention to wind down its e-cigarette business, Altria and JUUL announced an agreement that made Altria JUUL’s largest shareholder, allowed Altria to appoint an observer to JUUL’s Board of Directors, and would have permitted Altria to appoint three members of JUUL’s Board after converting its shares to voting securities. JUUL received over $12 billion, an agreement that Altria would not compete with JUUL for six years, and a range of support services.

The FTC alleges that Altria’s acquisition of JUUL shares and the associated agreements together constitute an unreasonable restraint of trade in violation of Section 1 of the Sherman Act and Section 5 of the FTC Act, and substantially lessened competition in violation of Section 7 of the Clayton Act.

The Commission vote to issue the administrative complaint was 5-0. The administrative trial is scheduled to begin on Jan. 5, 2021.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

Readout of Call of the Task Force on Nonbank Mortgage Liquidity

WASHINGTON – On March 30, U.S. Treasury Secretary Steven T. Mnuchin convened a call of the Task Force on Nonbank Mortgage Liquidity to discuss conditions and activities in the mortgage servicing markets.  The group heard a presentation on market conditions and the actions taken recently by Ginnie Mae to support servicers that participate in their programs.  Ginnie Mae and the Federal Housing Finance Agency will continue to monitor closely the markets and the condition of the nonbank entities that service Ginnie Mae, Fannie Mae and Freddie Mac MBS. 

Participants on the call included Secretary Mnuchin, Board of Governors of the Federal Reserve System Chair Jerome Powell, Comptroller of the Currency Joseph Otting, Federal Deposit Insurance Corporation Chairman Jelena McWilliams, Federal Housing Finance Agency Director Mark Calabria, Consumer Financial Protection Bureau Director Kathy Kraninger, Federal Housing Administration Commissioner Brian Montgomery, Ginnie Mae Principal Executive Vice President Seth Appleton, and Texas Department of Banking Commissioner Charles Cooper.

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With $349 Billion in Emergency Small Business Capital Cleared, Treasury and SBA Begin Unprecedented Public-Private Mobilization Effort to Distribute Funds

WASHINGTON – Following President Trump’s signing of the historic Coronavirus Aid, Relief, and Economic Security (CARES) Act, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin today announced that the SBA and Treasury Department have initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need. 

The CARES Act establishes a new $349 billion Paycheck Protection Program. The Program will provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed. 

“This legislation provides small business job retention loans to provide eight weeks of payroll and certain overhead to keep workers employed,” said Secretary Mnuchin. “Treasury and the Small Business Administration expect to have this program up and running by April 3rd so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day.  The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses.”

“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level,” said Administrator Carranza. “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.” 

The new loan program will help small businesses with their payroll and other business operating expenses. It will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees – all with a 100% guarantee from SBA. All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

The Paycheck Protection Program is specifically designed to help small businesses keep their workforce employed. Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program.

  • The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.

Loan Terms & Conditions

  • Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
  • Maximum loan amount up to $10 million
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
  • All loans under this program will have the following identical features:
    • Interest rate of 0.5%
    • Maturity of 2 years
    • First payment deferred for six months
    • 100% guarantee by SBA
    • No collateral
    • No personal guarantees
    • No borrower or lender fees payable to SBA

Visit treasury.gov/cares for more information on SBA’s assistance to small businesses.

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Treasury Encourages Businesses Impacted by COVID-19 to Use Employee Retention Credit

WASHINGTON – The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll.  The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

“We encourage businesses to take full advantage of the Employee Retention Credit to keep employees on their payroll during these challenging times,” said Secretary Steven T. Mnuchin. “This new credit is available to all employers, regardless of size of business, and covers up to 50 percent of up to $10,000 in wages.”

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take Small Business Loans.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter
  2. The employer’s gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer’s gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter.

These measures are calculated each calendar quarter.

How is the credit calculated?

The amount of the credit is 50 percent of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before January 1, 2021 are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business’s employees in 2019.

Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full time work, the employer still receives the credit.

Employers with more than 100 employees:  If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of  payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?

Updates on the implementation of this credit, a fact sheet and other information can be found on the Coronavirus page of IRS.gov.

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Treasury Delays Tax and Reporting Due Dates for Alcohol, Tobacco, Firearms and Ammunition Businesses Hit by COVID-19

WASHINGTON – The Treasury Department is delaying tax payment due dates for wine, beer, distilled spirits, tobacco products, firearms, and ammunition excise taxes, to provide flexibility for businesses that have been negatively affected by COVID-19.

“Many businesses regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB) have been adversely impacted by the COVID-19,” said Secretary Steven T. Mnuchin. “To assist these businesses during this challenging period, Treasury is postponing several filing and payment due dates for 90 days.”

The postponement of due dates applies to any tax payment or operational report with an original due date falling on or after March 1, 2020, through July 1, 2020. Interest and penalties will not apply when payments are made within 90 days of the original due date. TTB will re-evaluate the terms of this immediate relief as circumstances warrant.

Treasury recognizes that the operations of many of TTB’s regulated industry members may be impacted by COVID-19 in a variety of ways. We will consider applications on a case-by-case basis for the use of alternate methods and procedures that help the affected industry members to resume or continue their operations. Businesses requesting emergency variations from regulatory requirements can do so through this online contact form.

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Joint Statement on the Interaction of the CECL Revised Transition Interim Final Rule with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act

FIL-32-2020
March 31, 2020

Joint Statement on the Interaction of the CECL Revised Transition Interim Final Rule with Section 4014 of the Coronavirus Aid, Relief, and Economic Security Act

Printable Format:

FIL-32-2020 – PDF (PDF Help)

Summary:

This joint statement clarifies the interaction between the interim final rule that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital and the temporary CECL relief provided by the Coronavirus Aid, Relief, and Economic Security Act.

Statement of Applicability to Institutions with Total Assets under $1 Billion: This Financial Institution Letter (FIL) is applicable to banks that were required (as of January 1, 2020) to adopt CECL during the 2020 calendar year under U.S. generally accepted accounting principles.

Highlights:

  • On March 27, 2020, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued an interim final rule that provides banking organizations that were required (as of January 1, 2020) to adopt CECL during the 2020 calendar year an option to delay an estimate of CECL’s impact on regulatory capital.
  • Also, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law. The CARES Act provides banking organizations optional temporary relief from complying with CECL.
  • The joint statement clarifies the interaction between the CECL IFR and the CARES Act for purposes of regulatory capital requirements.