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Pennsylvania State Department extends deadlines for notaries
On May 6, the Pennsylvania Department of State extended deadlines for appointed notaries to get sworn in, record a bond, oath and commission with the Recorder of Deeds, and register their signatures with the Prothonotary’s office. Previously, all such actions were required to occur within 45 days of the appointment. The Department of State provided an additional 30 days.
Federal Reserve issues guidance regarding flood insurance compliance
On May 6, the Federal Reserve issued guidance to state member banks regarding flood insurance compliance in response to Covid-19. The guidance responds to a question regarding the extension of maturities/payments or balloon payments due to Covid-19 as well as a question about the impact of FEMA Bulletin W-20002 on force placement requirements under the Flood Disaster Protection Act and the implementing regulation.
Rhode Island extends Covid-19 executive orders
On May 6, the governor of Rhode Island extended multiple executive orders related to the Covid-19 pandemic until June 5, 2020. These include, among others, orders related to quarantines, remote corporate and shareholder meetings, and unemployment insurance.
California suspends penalties for late payment of property taxes for certain taxpayers
On May 6, California issued an executive order suspending until May 6, 2021, certain provisions of the California Revenue and Taxation code that would impose penalties, costs, or interest for a failure to pay property taxes, provided that certain conditions are satisfied. For example, the property for which the taxes were not paid must either be residential real property occupied by the taxpayer or real property owned and operated by the taxpayer that qualifies as a small business under the Small Business Administration’s regulations. The taxpayer must also demonstrate that the taxpayer has suffered economic hardship, or was otherwise unable to pay in a timely fashion, due to Covid-19 or any local, state, or federal government response to Covid-19.
24 state attorneys general urge changes to the PPP
On May 6, twenty-four state attorneys general sent congressional leadership a letter urging changes to the Paycheck Protection Program (PPP) to ensure that funds are distributed fairly, equitably and efficiently. The letter asserts that while the PPP has helped many small businesses already by “rapidly inject[ing] the initial $349 billion in funding into our struggling economy,” larger, more “well-connected” companies were better able to take advantage of the process and the program “has suffered from a notable lack of transparency, technical savvy, and functionality.” Specifically, the letter argues that due to insufficient guidance to lenders, the first round of funding “left far too many small businesses empty handed.” In order to ensure any additional funding allocated to the program effectively supports small businesses, the letter requests certain issues be addressed by Congress, including, among other things, (i) prohibiting applications from publicly traded companies with access to alternative funding sources; (ii) ensuring lenders do not favor existing, larger, and more lucrative customers over other applicants; (iii) allocating a portion of future funding exclusively for minority-owned small businesses; (iv) improving communication and technical support; (v) adding flexibility to the loan forgiveness requirements to account for the variety of circumstances facing small businesses; and (vi) providing more direct guidance to lenders.
California small business sues nonbank lender over PPP prioritization
On May 6, a small California business filed a proposed class action against a nonbank lender, accusing the lender of a “scheme to enrich itself at the expense of small businesses in connection with the federal government’s Paycheck Protection Program (PPP),” in violation of California’s Unfair Competition Law. In the complaint, the plaintiff alleges she submitted an application for less than $25,000 to the lender on March 28 and received an email response that same day acknowledging receipt of her application. On March 29, the plaintiff received another email from the lender, which asked her to gather documentation and stated that she would receive an invitation to a secure portal in the next “48 business hours.” According to the complaint, however, by April 13, the plaintiff had not yet received a link to the portal, but the lender had sent an email acknowledging the delay. The complaint states that the plaintiff “informed and believes, and on that basis alleges” that the lender “chose to prioritize higher loans that would yield higher fees,” and did not disclose to the public that “it was prioritizing loans not on a first come, first served basis, but on criteria relating to the value of the loan.” The plaintiff alleges she would have chosen a different lender had she known the lender was going to prioritize larger loans. The complaint seeks injunctive relief, restitution, as well as compensatory and punitive damages.
11th Circuit will not rehear en banc city’s Fair Housing Act suit
On April 27, a majority panel for the U.S. Court of Appeals for the Eleventh Circuit denied the City of Miami Gardens’s petition for rehearing en banc after determining that the City “faced an uphill battle” to establish standing to bring a Fair Housing Act lawsuit against a national bank because it mainly relied on “an attenuated theory of injury.” As previously covered by InfoBytes, last July the 11th Circuit dismissed the City’s lawsuit against the bank for lack of standing after concluding, among other things, that the City’s evidence that certain loans may go into foreclosure at some point in the future “does not satisfy the requirement that a threatened injury be ‘imminent, not conjectural or hypothetical,’” and that the City failed to provide evidence that certain foreclosed loans had an effect on property-tax revenues or municipal spending or were issued on discriminatory terms. In explaining their decision to not rehear its 2019 ruling en banc, the majority stated that its decision—that the City failed to satisfy its burden of establishing standing—respects “the concerns and fairness and notice demanded by” both U.S. Supreme Court and 11th Circuit precedent. Two dissenting judges countered, however, that the rehearing should have been granted because, among other things, the 11th Circuit’s dismissal for lack of standing was done sua sponte “even though the City received neither proper notice that it failed to prove standing nor a legitimate opportunity to discover or produce the requisite evidence.”
FCC changes TCPA enforcement under TRACED Act
On May 1, the FCC issued an order announcing the Commission will no longer send entities outside its jurisdiction warnings prior to commencing an enforcement action related to TCPA robocall violations. Specifically, the order, as mandated under Section 3 of the TRACED Act (covered by InfoBytes here), (i) removes provisions that previously required the FCC to issue a warning prior to imposing penalties for making robocalls; (ii) increases the maximum fine that the FCC can assess for robocall violations to $10,000 per intentional unlawful call, in addition to a forfeiture penalty amount; and (iii) extends the statute of limitations to four years for the FCC to investigate and take enforcement action against an entity that violates the TCPA. The order takes effect 30 days after publication in the Federal Register.
Fed extends initial compliance dates for certain parts of SCCL
On May 1, the Federal Reserve Board (Fed) announced it would extend the initial compliance dates for certain parts of its single-counterparty credit limit rule (SCLL), which was approved in 2018 and limits a U.S. bank holding company’s or foreign banking organization’s credit exposure to another counterparty. As previously covered by InfoBytes, the Fed initially proposed the extension last November. Under the extension, the largest foreign banks subject to the single-counterparty credit limit rule will have until July 1, 2021 to comply, while smaller foreign banks will not be required to comply until January 1, 2022.
Fed, OCC, FDIC respond to Crapo’s PPP support letter
In April, Senator Mike Crapo (R-ID), Chairman of the Senate Banking Committee, received replies to an April 8 letter he sent to the Federal Reserve (Fed), OCC, NCUA, and FDIC, which urged the regulators to “strengthen the Paycheck Protection Program” (PPP) and requested that they provide recommendations to assist the market as well as lenders and borrowers affected by Covid-19.
The Fed highlighted how it has strengthened the PPP, stating it: (i) eased “leverage requirements for community banks”; (ii) “published rules delaying the impact on regulatory capital of new loan-loss accounting standards”; (iii) created a new lending facility for the PPP; (iv) jointly with the FDIC, and OCC, “issued an interim final rule to clarify that a zero percent risk weight applies to PPP loans and to neutralize the regulatory capital effects of participating in the new PPP lending facility, helping preserve the flow of credit to small businesses”; (v) “encouraged institutions to use their capital buffers for their primary purpose: to support safe and sound lending throughout the credit cycle”; and (vi) provided suggestions for “congressional action to improve regulatory flexibility.”
The OCC’s replied that it has taken the following actions, among others, to support the PPP: (i) “encouraged banks to work with customers affected by” the pandemic; (ii) “encouraged banks to use the [Fed’s] discount window”; (iii) encouraged use of capital and liquidity buffers by banks; (iv) issued a joint statement with five regulatory agencies promoting “responsible small-dollar loans to consumers and small businesses”; (v) jointly issued interim final rules regarding regulatory capital and deferral of real estate appraisals; and (vi) coordinated listening sessions on the PPP.
The FDIC stated it is working to provide “necessary flexibility to both banks and their customers.” The agency’s response also enumerated several other actions it has taken to promote the PPP, including that it: (i) created a PPP information page on their website; (ii) shared bank questions and concerns with the Small Business Administration (SBA); (iii) created bank frequently asked questions; (iv) issued a financial institution letter referencing resources from the SBA and the Treasury; (v) continues to “provid[e]…resources to our examination teams so they” can better answer questions from regulated institutions; and (vi) jointly with other regulatory agencies, issued guidance on current expected credit losses methodology and community bank leverage ratio. The FDIC also reported possible supplementary and tier 1 leverage ratio changes.