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Federal Bank Regulators, Joint Release — Paycheck Protection Program Facility, News Release 2020-51 (April 9, 2020)

Summary

News Release 2020-51 dated April 9, 2020, a Joint Release from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, Federal Bank Regulators Issue Interim Final Rule for Paycheck Protection Program Facility. It states that the agencies announced an interim final rule to encourage lending to small businesses through the SBA's Paycheck Protection Program. It states that the rule modifies the agencies' capital rules to neutralize the regulatory capital effects of participating in the Federal Reserve's PPP facility and clarifies that a zero percent risk weight applies to loans covered by the PPP. It states that the rule is effective immediately and comments will be accepted for 30 days after publication in the Federal Register.

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Cited in: Charles W. Calomiris

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“Federal Bank Regulators, Joint Release — Paycheck Protection Program Facility, News Release 2020-51 (April 9, 2020).” Original at www.occ.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/nr-ia-2020-51-html-82f147990ed119c2-4e29b572f2/, SHA-256 a2f90fb25b2c968d3d63b1f8402bcc9d77abb52755e6d94c6df822251f78eaff.

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News Release 2020-51 | April 9, 2020

Federal Bank Regulators Issue Interim Final Rule for Paycheck Protection Program Facility

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Joint Release

Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation Office of the Comptroller of the Currency

The federal bank regulatory agencies today announced an interim final rule to encourage lending to small businesses through the Small Business Administration's Paycheck Protection Program, or PPP. The PPP was established by the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, and provides loans to small businesses so that they can keep their workers on the payroll during the disruptions caused by the coronavirus.

The interim final rule modifies the agencies' capital rules to neutralize the regulatory capital effects of participating in the Federal Reserve's PPP facility because there is no credit or market risk in association with PPP loans pledged to the facility. Consistent with the agencies' current capital rules and the CARES Act requirements, the interim final rule also clarifies that a zero percent risk weight applies to loans covered by the PPP for capital purposes.

The rule is effective immediately and comments will be accepted for 30 days after publication in the Federal Register .

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Media Contacts

Federal Reserve Eric Kollig (202) 452-2955 FDIC Brian Sullivan (202) 898-6534 OCC Bryan Hubbard (202) 649-6870

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