[Federal Register Volume 85, Number 88 (Wednesday, May 6, 2020)]
[Rules and Regulations]
[Pages 26835-26842]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09716]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 85, No. 88 / Wednesday, May 6, 2020 / Rules
and Regulations
[[Page 26835]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 50
[Docket No. OCC-2020-0019]
RIN 1557-AE92
FEDERAL RESERVE SYSTEM
12 CFR Part 249
[Regulations WW; Docket No. R-1717]
RIN 7100-AF90
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 329
RIN 3064-AF51
Liquidity Coverage Ratio Rule: Treatment of Certain Emergency
Facilities
AGENCY: Office of the Comptroller of the Currency (OCC), Board of
Governors of the Federal Reserve System (Board), and Federal Deposit
Insurance Corporation (FDIC).
ACTION: Interim final rule; request for comment.
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SUMMARY: To provide liquidity to the money market sector, small
business lenders, and the broader credit markets in order to stabilize
the financial system, the Board of Governors of the Federal Reserve
System (Board) authorized the establishment of the Money Market Mutual
Fund Liquidity Facility (MMLF) and the Paycheck Protection Program
Liquidity Facility (PPPLF), pursuant to section 13(3) of the Federal
Reserve Act. To facilitate use of these Federal Reserve facilities, and
to ensure that the effects of their use are consistent and predictable
under the Liquidity Coverage Ratio (LCR) rule, the Office of the
Comptroller of the Currency, the Board, and the Federal Deposit
Insurance Corporation (together, the agencies) are adopting this
interim final rule to require banking organizations to neutralize the
effect under the LCR rule of participating in the MMLF and the PPPLF.
DATES: The interim final rule is effective May 6, 2020. Comments on the
interim final rule must be received no later than June 5, 2020.
ADDRESSES:
OCC: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal or email, if possible. Please use the title
``Liquidity Coverage Ratio Rule: Treatment of Emergency FRB Secured
Lending Facilities'' to facilitate the organization and distribution of
the comments. You may submit comments by any of the following methods:
Federal eRulemaking Portal--Regulations.gov Classic or
Regulations.gov Beta: Regulations.gov Classic: Go to https://www.regulations.gov/. Enter ``Docket ID OCC-2020-0019'' in the Search
Box and click ``Search.'' Click on ``Comment Now'' to submit public
comments. For help with submitting effective comments please click on
``View Commenter's Checklist.'' Click on the ``Help'' tab on the
Regulations.gov home page to get information on using Regulations.gov,
including instructions for submitting public comments.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0019'' in the Search Box and click
``Search.'' Public comments can be submitted via the ``Comment'' box
below the displayed document information or by clicking on the document
title and then clicking the ``Comment'' box on the top-left side of the
screen. For help with submitting effective comments please click on
``Commenter's Checklist.'' For assistance with the Regulations.gov Beta
site, please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-
Friday, 9 a.m.-5 p.m. ET or email [email protected].
Email: [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, suite 3E-218,
Washington, DC 20219.
Fax: (571) 465-4326.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2020-0019'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this rulemaking action by any of the following methods:
Viewing Comments Electronically--Regulations.gov Classic
or Regulations.gov Beta: Regulations.gov Classic: Go to https://www.regulations.gov/. Enter ``Docket ID OCC-2020-0019'' in the Search
box and click ``Search.'' Click on ``Open Docket Folder'' on the right
side of the screen. Comments and supporting materials can be viewed and
filtered by clicking on ``View all documents and comments in this
docket'' and then using the filtering tools on the left side of the
screen. Click on the ``Help'' tab on the Regulations.gov home page to
get information on using Regulations.gov. The docket may be viewed
after the close of the comment period in the same manner as during the
comment period.
Regulations.gov Beta: Go to https://beta.regulations.gov/ or click
``Visit New Regulations.gov Site'' from the Regulations.gov Classic
homepage. Enter ``Docket ID OCC-2020-0019'' in the Search Box and click
``Search.'' Click on the ``Comments'' tab. Comments can be viewed and
filtered by clicking on the ``Sort By'' drop-down on the right side of
the screen or the ``Refine Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the
``Documents'' tab and filtered by clicking on the ``Sort By'' drop-down
on the right side of the screen or the
[[Page 26836]]
``Refine Results'' options on the left side of the screen.'' For
assistance with the Regulations.gov Beta site, please call (877) 378-
5457 (toll free) or (703) 454-9859 Monday-Friday, 9 a.m.-5 p.m. ET or
email [email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
Board: You may submit comments, identified by Docket No. R-1717;
RIN 7100-AF90, by any of the following methods:
Agency website: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Email: [email protected]. Include docket
and RIN numbers in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments will be made available on the Board's website
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Accordingly, comments will not be edited to remove any identifying or
contact information. For security reasons, the Board requires that
visitors make an appointment to inspect comments. You may do so by
calling (202) 452-3684.
FDIC: You may submit comments, identified by RIN 3064-AF51, by any
of the following methods:
Agency website: https://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency
website.
Email: [email protected]. Include ``RIN 3064-AF51'' on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments/RIN 3064-AF51, Federal Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
Hand Delivered/Courier: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW, building
(located on F Street) on business days between 7:00 a.m. and 5:00 p.m.
FOR FURTHER INFORMATION CONTACT:
OCC: James Weinberger, Technical Expert, Treasury & Market Risk
Policy, (202) 649-6360; or Henry Barkhausen, Counsel, or Daniel Perez,
Senior Attorney, Chief Counsel's Office, (202) 649-5490, for persons
who are deaf or hearing impaired, TTY, (202) 649-5597, Office of the
Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
Board: Anna Lee Hewko, Associate Director, (202) 530-6360,
Constance Horsley, Deputy Associate Director, (202) 452-5239, Kathryn
Ballintine, Manager, (202) 452-2555, Kevin Littler, Lead Financial
Institution Policy Analyst, (202) 475-6677, Cecily Boggs, Senior
Financial Institution Policy Analyst II, (202) 530-6209, Michael Ofori-
Kuragu, Senior Financial Institution Policy Analyst II, (202) 475-6623,
or Christopher Powell, Senior Financial Institution Policy Analyst II,
(202) 452-3442, Division of Supervision and Regulation; Benjamin
McDonough, Assistant General Counsel, (202) 452-2036, Steve Bowne,
Senior Counsel, (202) 452-3900, Jason Shafer, Senior Counsel, (202)
728-5811, Laura Bain, Counsel, (202) 736-5546, or Jeffery Zhang,
Attorney, (202) 736-1968, Legal Division, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551. Users of Telecommunication Device for Deaf (TDD)
only, call (202) 263-4869.
FDIC: Bobby R. Bean, Associate Director, [email protected]; Irina
Leonova, Acting Chief, Capital Markets Strategies Section,
[email protected]; Eric Schatten, Senior Policy Analyst,
[email protected]; Andrew Carayiannis, Senior Policy Analyst,
[email protected]; [email protected]; Capital Markets Branch,
Division of Risk Management Supervision, (202) 898-6888; or Suzanne
Dawley, Counsel, [email protected]; Gregory Feder, Counsel,
[email protected]; Andrew B. Williams II, Counsel, [email protected];
Supervision and Legislation Branch, Legal Division, Federal Deposit
Insurance Corporation, 550 17th Street NW, Washington, DC 20429. For
the hearing impaired only, Telecommunication Device for the Deaf (TDD),
(800) 925-4618.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. The Interim Final Rule
III. Administrative Law Matters
A. Administrative Procedure Act
B. Congressional Review Act
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Riegle Community Development and Regulatory Improvement Act
of 1994
F. Use of Plain Language
G. OCC Unfunded Mandates Reform Act of 1995 Determination
I. Background
The containment measures adopted in response to the public health
concerns have slowed economic activity in many countries, including the
United States. Financial conditions have tightened markedly, sudden
disruptions in financial markets have put increasing liquidity pressure
on money market mutual funds, and the cost of credit has risen for most
borrowers. Given these liquidity pressures, money market mutual funds
have been faced with redemption requests from clients with immediate
cash needs and may need to sell a significant number of assets to meet
such requests, which could further increase market pressures. Small
businesses also are facing severe liquidity constraints, as millions of
Americans have been ordered to stay home, severely reducing their
ability to engage in normal commerce, and revenue streams for many
small businesses have collapsed. This has forced many small businesses
to close temporarily or furlough employees. Continued access to
financing will be crucial for small businesses to weather economic
disruptions caused by the containment measures adopted in response to
the public health concerns and, ultimately, to help restore economic
activity.
In order to prevent the disruption in the money markets from
destabilizing the financial system, the Board of Governors of the
Federal Reserve System (Board), with the approval of the Secretary of
the Treasury, authorized the Federal Reserve Bank of Boston to
establish the Money Market Mutual Fund Liquidity Facility (MMLF),
pursuant to section 13(3) of the Federal Reserve Act.\1\ Under the
MMLF, the Federal Reserve Bank of Boston extends non-recourse loans to
eligible borrowers to purchase assets from money market mutual funds
(MMFs). Assets purchased from MMFs are posted as collateral to the
Federal Reserve Bank of Boston (MMLF collateral). Eligible borrowers
under the MMLF include certain banking organizations subject to the
Liquidity Coverage Ratio (LCR) rule (covered companies) issued by the
Office of the Comptroller of the Currency (OCC), the Board, and the
Federal Deposit Insurance Corporation (FDIC) (together, the
agencies).\2\ MMLF collateral generally comprises securities
[[Page 26837]]
and other assets with the same maturity date as the MMLF non-recourse
loan.
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\1\ 12 U.S.C. 343(3).
\2\ The applicability of the LCR rule is described in Sec. __.1
of the rule. See 12 CFR 50.1 (OCC); 12 CFR 249.1 (Board); and 12 CFR
329.1 (FDIC).
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In order to provide liquidity to small business lenders and the
broader credit markets, and to help stabilize the financial system, the
Board, with the approval of the Secretary of the Treasury, authorized
each of the Federal Reserve Banks to extend credit under the Paycheck
Protection Program Liquidity Facility (PPPLF), pursuant to section
13(3) of the Federal Reserve Act.\3\ Under the PPPLF, each of the
Federal Reserve Banks extends non-recourse loans to institutions that
are eligible to make Paycheck Protection Program (PPP) covered
loans,\4\ including depository institutions subject to the agencies'
LCR rule. Under the PPPLF, only PPP covered loans that are guaranteed
by the SBA under the PPP with respect to both principal and interest
and that are originated by an eligible institution may be pledged as
collateral to the Federal Reserve Banks (PPPLF collateral). The
maturity date of the extension of credit under the PPPLF equals the
maturity date of the PPP loans pledged to secure the extension of
credit.\5\
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\3\ 12 U.S.C. 343(3).
\4\ Congress created the PPP as part of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act) and in recognition of
the exigent circumstances faced by small businesses. PPP covered
loans are fully guaranteed as to principal and accrued interest by
the Small Business Administration (SBA) and also afford borrower
forgiveness up to the principal amount of the PPP covered loan, if
the proceeds of the PPP covered loan are used for certain expenses.
Under the PPP, eligible borrowers generally include businesses with
fewer than 500 employees or that are otherwise considered to be
small by the SBA. The SBA reimburses PPP lenders for any amount of a
PPP covered loan that is forgiven. PPP lenders are not held liable
for any representations made by PPP borrowers in connection with a
borrower's request for PPP covered loan forgiveness. For more
information on the Paycheck Protection Program, see https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
\5\ The maturity date of the PPPLF's loan will be accelerated if
the underlying PPP loan goes into default and the eligible borrower
sells the PPP Loan to the Small Business Administration (SBA) to
realize the SBA guarantee. The maturity date of the PPPLF's loan
also will be accelerated to the extent of any PPP loan forgiveness
reimbursement received by the eligible borrower from the SBA.
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To facilitate the use of the MMLF and PPPLF, the agencies are
adopting this interim final rule, which requires covered companies to
neutralize the LCR effects of the advances made by each facility and
the exposures securing such facility advances.
II. The Interim Final Rule
A. LCR Treatment of MMLF and PPPLF Funding
The agencies' LCR rule requires covered companies to calculate and
maintain an amount of high-quality liquid assets (HQLA) sufficient to
cover their total net cash outflows over a 30-day stress period. A
covered company's LCR is the ratio of its HQLA amount (LCR numerator)
divided by its total net cash outflows (LCR denominator). The total net
cash outflow amount is calculated as the difference between outflow and
inflow amounts, which are determined by applying a standardized set of
outflow and inflow rates to the cash flows of various assets and
liabilities, together with off-balance sheet items, as specified in
Sec. Sec. __.32 and __.33 of the LCR rule.\6\
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\6\ Section __.30 of the LCR rule also requires a covered
company, as applicable, to include in its total net cash outflow
amount a maturity mismatch add-on, which is calculated as the
difference (if greater than zero) between the covered company's
largest net cumulative maturity outflow amount for any of the 30
calendar days following the calculation date and the net day 30
cumulative maturity outflow amount. See 12 CFR 50.30 (OCC); 12 CFR
249.30 (Board); and 12 CFR 329.30 (FDIC).
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Absent the interim final rule, under the LCR rule, covered
companies would be required to recognize outflows for MMLF and PPPLF
loans with a remaining maturity of 30 days or less and inflows for
certain assets securing the MMLF and PPPLF loans. As a result, a
covered company's participation in the MMLF or PPPLF could affect its
total net cash outflows, which could potentially result in an
inconsistent, unpredictable, and more volatile calculation of LCR
requirements across covered companies.
Under the LCR rule, secured loans from a Federal Reserve facility
with a remaining maturity of 30 calendar days or less are categorized
as secured funding transactions with a sovereign entity and assigned an
outflow rate that varies based on the collateral securing the loan.\7\
In addition, the LCR rule assigns inflow rates to collateral generally
based on the asset and counterparty type.\8\ As a result of the
applicable inflow and outflow rates in the LCR rule, MMLF and PPPLF
transactions could receive a non-neutral liquidity risk treatment.
Moreover, after these loans are extended and upon their maturity, the
associated inflows and outflows could unnecessarily contribute to
volatility in LCRs.
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\7\ See 12 CFR 50.32(j)(1)(i)-(iii) (OCC); 12 CFR
249.32(j)(1)(i)-(iii) (Board); and 12 CFR 329.32(j)(1)(i)-(iii)
(FDIC).
\8\ See 12 CFR 50.33 (OCC); 12 CFR 249.33 (Board); and 12 CFR
329.33 (FDIC).
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Under the terms of the MMLF and PPPLF, covered companies use the
value of cash received from posted or pledged assets to repay the MMLF
or PPPLF loan, respectively, and in no case is the maturity of the
collateral shorter than the maturity of the advance. In addition,
because the advance from the Federal Reserve Bank is non-recourse, the
banking organization is not exposed to credit or market risk from the
collateral securing the MMLF or PPPLF loan that could otherwise affect
the banking organization's ability to settle the loan. For these
reasons, the agencies believe that it is appropriate to provide
predictable and consistent treatment for participation in the MMLF and
PPPLF by neutralizing the effects of participation in the MMLF and the
PPPLF on covered companies' LCRs. Absent this interim final rule, the
agencies believe that the treatment of covered companies' transactions
with the MMLF and PPPLF under the LCR rule would not be consistent
across transactions or facilities and would not accurately reflect the
liquidity risk associated with funding exposures through these
facilities.
Specifically, the interim final rule adds a new definition to Sec.
__.3 and a new Sec. __.34 to the LCR rule. In Sec. __.3, the new
definition ``Covered Federal Reserve Facility Funding'' means a non-
recourse loan that is extended as part of the Money Market Mutual Fund
Liquidity Facility or Paycheck Protection Program Liquidity Facility
authorized by the Board of Governors of the Federal Reserve System
pursuant to section 13(3) of the Federal Reserve Act. The new Sec.
__.34 requires Covered Federal Reserve Facility Funding and the assets
securing such funding to be excluded from the calculation of a covered
company's total net cash outflow amount as calculated under Sec. __.30
of the LCR rule, notwithstanding any other section of the LCR rule.
Except as described below, this new section excludes advances made by a
Federal Reserve Bank under the MMLF or the PPPLF from being assigned an
outflow rate under Sec. __.32 of the LCR rule, and any collateral
securing such an advance from being assigned an inflow rate under Sec.
__.33 of the LCR rule. While this treatment would neutralize the effect
of the use of the facilities on a covered company's LCR for the
duration of the facility, banking organizations should be mindful of
the need, where applicable, to replace maturing Covered Federal Reserve
Facility Funding with appropriate alternative sources in instances
where exposures mature later than such funding.
[[Page 26838]]
This new Sec. __.34 does not apply to the extent the covered
company secures Covered Federal Reserve Facility Funding with
securities, debt obligations, or other instruments issued by the
covered company or its consolidated entity. When a covered company owns
an instrument that it or its consolidated entity issued, the covered
company will not record a payment upon the instrument's maturity. The
covered company would not receive a payment from outside the
consolidated covered company upon maturity or settlement of the
collateral that would be available to repay the borrowing (Covered
Federal Reserve Facility Funding), and, as a result, this arrangement
presents liquidity risk due to the asymmetric cash flows of the covered
company because the covered company would not have an inflow to offset
its cash outflows.\9\ It would, therefore, be inappropriate to
neutralize the impact of such a funding transaction under the LCR rule.
The agencies seek comment on this provision and all aspects of the
interim final rule.
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\9\ The covered company would not record a payment to itself in
the amount owed for the instrument issued by the covered company or
its consolidated entity; this would be eliminated in the process of
consolidating the covered company's financial statements.
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Question 1: The agencies invite comment on the advantages and
disadvantages of neutralizing the effects of participating in the MMLF
and PPPLF in the LCR rule.
Question 2: How well does the approach in the interim final rule
support the objectives of the facilities?
Question 3: What are the advantages and disadvantages of extending
this treatment to any other facilities created pursuant to section
13(3) of the Federal Reserve Act in which covered company exposures are
pledged as collateral for non-recourse, maturity-matched advances?
Question 4: What are the advantages and disadvantages of excluding
from this treatment Covered Federal Reserve Facility Funding that is
secured by instruments issued by a covered company or any of its
consolidated entities?
III. Administrative Law Matters
A. Administrative Procedure Act
The agencies are issuing the interim final rule without prior
notice and the opportunity for public comment and the delayed effective
date ordinarily prescribed by the Administrative Procedure Act
(APA).\10\ Pursuant to section 553(b)(B) of the APA, general notice and
the opportunity for public comment are not required with respect to a
rulemaking when an ``agency for good cause finds (and incorporates the
finding and a brief statement of reasons therefor in the rules issued)
that notice and public procedure thereon are impracticable,
unnecessary, or contrary to the public interest.'' \11\
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\10\ 5 U.S.C. 553.
\11\ 5 U.S.C. 553(b)(B).
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The agencies believe that the public interest is best served by
implementing the interim final rule immediately upon publication in the
Federal Register. As discussed above, the containment measures adopted
in response to the public health concerns have slowed economic activity
in many countries, including the United States. In particular, these
containment measures have acutely affected small businesses, MMFs, and
financial markets generally.
Significantly tighter financial conditions and the increased cost
of credit for most borrowers have severely affected small businesses.
As millions of Americans have been ordered to stay home, severely
reducing their ability to engage in normal commerce, revenue streams
for many small businesses have collapsed. This has resulted in severe
liquidity constraints at small businesses and has forced many small
businesses to close temporarily or furlough employees. Continued access
to financing will be crucial for small businesses to weather economic
disruptions caused by the containment measures adopted in response to
the public health concerns and, ultimately, to help restore economic
activity.
Additionally, sudden disruptions in financial markets have put
increasing liquidity pressure on MMFs. Given these pressures, MMFs have
been faced with increased redemption requests from clients with
immediate cash needs. The MMFs may need to sell a significant number of
assets to meet these redemption requests, which could further increase
market pressures.
In order to provide liquidity to banking organizations that lend to
small business and the broader credit markets, and to prevent the
disruption in the money markets from destabilizing the financial
system, the Board, with approval of the Secretary of the Treasury,
authorized each of the Federal Reserve Banks to extend credit under the
PPPLF and the Federal Reserve Bank of Boston to establish the MMLF.
This interim final rule will provide certainty to covered companies
regarding the liquidity treatment of inflows and outflows related to
these Federal Reserve lending programs. In the absence of this interim
final rule, banking organizations may be restricted in their ability to
use the MMLF and PPPLF due to potential effects on their LCRs. The
urgent funding pressures facing small businesses and MMFs justify the
adoption of this interim final rule as quickly as possible. For these
reasons, the agencies find that there is good cause consistent with the
public interest to issue the interim final rule without advance notice
and comment.\12\
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\12\ 5 U.S.C. 553(b)(B).
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The APA also requires a 30-day delayed effective date, except for
(1) substantive rules that grant or recognize an exemption or relieve a
restriction; (2) interpretative rules and statements of policy; or (3)
as otherwise provided by the agency for good cause.\13\ For the good
cause described above, the interim final rule is exempt from the APA's
delayed effective date requirement.\14\
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\13\ 5 U.S.C. 553(d).
\14\ 5 U.S.C. 553(d)(1).
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While the agencies believe that there is good cause to issue the
interim final rule without advance notice and comment and with an
immediate effective date, the agencies are interested in the views of
the public and request comment on all aspects of the interim final
rule.
B. Congressional Review Act
For purposes of Congressional Review Act (CRA), the Office of
Management and Budget (OMB) makes a determination as to whether a final
rule constitutes a ``major'' rule.\15\ If a rule is deemed a ``major
rule'' by the OMB, the CRA generally provides that the rule may not
take effect until at least 60 days following its publication.\16\
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\15\ 5 U.S.C. 801 et seq.
\16\ 5 U.S.C. 801(a)(3).
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The CRA defines a ``major rule'' as any rule that the Administrator
of the Office of Information and Regulatory Affairs of the OMB finds
has resulted in or is likely to result in (1) an annual effect on the
economy of $100,000,000 or more; (2) a major increase in costs or
prices for consumers, individual industries, Federal, State, or local
government agencies or geographic regions; or (3) significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic and export
markets.\17\
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\17\ 5 U.S.C. 804(2).
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For the same reasons set forth above, the agencies are adopting the
interim final rule without the delayed effective date generally
prescribed under the CRA. The delayed effective date
[[Page 26839]]
required by the CRA does not apply to any rule for which an agency for
good cause finds (and incorporates the finding and a brief statement of
reasons therefor in the rule issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public
interest.\18\ In light of current market uncertainty, the agencies
believe that delaying the effective date of the rule would be contrary
to the public interest.
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\18\ 5 U.S.C. 808.
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As required by the CRA, the agencies will submit the interim final
rule and other appropriate reports to Congress and the Government
Accountability Office for review.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) states that no agency may
conduct or sponsor, nor is the respondent required to respond to, an
information collection unless it displays a currently valid OMB control
number.\19\ This interim final rule does not introduce any new
information collections or revise any existing information collections
pursuant to the PRA for the OCC or the FDIC. Therefore, no submissions
will be made by the OCC or the FDIC to OMB for review. The interim
final rule does, however, affect the Board's current information
collection for the Complex Institution Liquidity Monitoring Report (FR
2052a; OMB No. 7100-0361). The Board has reviewed the interim final
rule pursuant to authority delegated by OMB.
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\19\ 4 U.S.C. 3501-3521.
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The Board has temporarily revised the reporting form and
instructions for the FR 2052a to reflect the changes made in this
interim final rule. On June 15, 1984, OMB delegated to the Board
authority under the PRA to approve a temporary revision to a collection
of information without providing opportunity for public comment if the
Board determines that a change in an existing collection must be
instituted quickly and that public participation in the approval
process would defeat the purpose of the collection or substantially
interfere with the Board's ability to perform its statutory obligation.
The Board's delegated authority requires that the Board, after
temporarily approving a collection, solicit public comment on a
proposal to extend the temporary collection for a period not to exceed
three years. Therefore, the Board is inviting comment on a proposal to
extend the FR 2052a for three years, with such revisions. The Board
invites public comment on the FR 2052a, which is being reviewed under
authority delegated by the OMB under the PRA. Comments are invited on
the following:
a. Whether the collection of information in the interim final rule
is necessary for the proper performance of the Board's functions,
including whether the information has practical utility;
b. The accuracy of the Board's estimate of the burden of the
proposed information collection in the interim final rule, including
the validity of the methodology and assumptions used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
Comments must be submitted on or before July 6, 2020. At the end of
the comment period, the comments and recommendations received will be
analyzed to determine the extent to which the Board should modify the
information collection.
Approval Under OMB Delegated Authority of the Temporary Revision of,
and Proposal To Extend for Three Years, With Revision, the Following
Information Collection
Report title: Complex Institution Liquidity Monitoring Report.
Agency form number: FR 2052a.
OMB control number: 7100-0361.
Effective date: May 6, 2020.
Frequency: Monthly, and each business day (daily).
Affected public: Businesses or other for-profit.
Respondents: U.S. bank holding companies (BHCs), U.S. savings and
loan holding companies (SLHCs), and foreign banking organizations
(FBOs) with U.S. assets.
Estimated number of respondents: Monthly, 26; daily, 16.
Estimated average hours per response: Monthly, 120; daily, 220.
Estimated annual burden hours: 917,440.
General description of report: The Board uses the FR 2052a to
monitor the overall liquidity profile of supervised institutions. These
data provide detailed information on the liquidity risks within
different business lines (e.g., financing of securities positions,
prime brokerage activities). In particular, these data serve as part of
the Board's supervisory surveillance program in its liquidity risk
management area and provide timely information on firm-specific
liquidity risks during periods of stress. Analyses of systemic and
idiosyncratic liquidity risk issues are then used to inform the Board's
supervisory processes, including the preparation of analytical reports
that detail funding vulnerabilities.
Legal authorization and confidentiality: The FR 2052a is authorized
pursuant to section 5 of the Bank Holding Company Act (12 U.S.C. 1844),
section 8 of the International Banking Act (12 U.S.C. 3106), section
165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act) (12 U.S.C. 5365), and section 10 of the Home Owners'
Loan Act (12 U.S.C. 1467(a)) and is mandatory. Section 5(c) of the Bank
Holding Company Act authorizes the Board to require BHCs to submit
reports to the Board regarding their financial condition. Section 8(a)
of the International Banking Act subjects FBOs to the provisions of the
Bank Holding Company Act. Section 165 of the Dodd-Frank Act requires
the Board to establish prudential standards for certain BHCs and FBOs,
which include liquidity requirements. Section 10(g) of the Home Owners'
Loan Act authorizes the Board to collect reports from SLHCs.
Financial institution information required by the FR 2052a is
collected as part of the Board's supervisory process. Therefore, such
information is entitled to confidential treatment under Exemption 8 of
the Freedom of Information Act (FOIA) (5 U.S.C. 552(b)(8)). In
addition, the institution information provided by each respondent would
not be otherwise available to the public and its disclosure could cause
substantial competitive harm. Accordingly, it is entitled to
confidential treatment under the authority of exemption 4 of the FOIA
(5 U.S.C. 552(b)(4)), which protects from disclosure trade secrets and
commercial or financial information.
Current actions: The Board has temporarily revised the reporting
form and instructions of the FR 2052a to incorporate the interim final
rule. Specifically, the Board has added: (1) The sub-product value of
``Covered Federal Reserve Facility Funding'' to the product O.S.6:
Exceptional Central Bank Operations and a corresponding instruction to
exclude balances reported under this sub-product from the pre-existing
sub-product of ``Federal Reserve Bank''; (2) a sentence to the
``General Guidance'' paragraphs under the I.U: Inflows-Unsecured and
I.S: Inflows-Secured headings: ``Exclude assets that secure Covered
Federal
[[Page 26840]]
Reserve Facility Funding''; (3) a sentence to the definition of product
I.O.6: Interest and Dividends Receivable: ``Exclude interest and
dividends receivable on assets securing Covered Federal Reserve
Facility Funding''; (4) a sentence to the definition of product O.O.19:
Interest and Dividends Payable: ``Exclude interest payable on Covered
Federal Reserve Facility Funding''; and (5) a collateral class of ``L-
12'' representing loans guaranteed by U.S. Government agencies.
The Board has determined that these temporary revisions to the FR
2052a must be instituted quickly and that public participation in the
approval process would defeat the purpose of the collection of
information, as delaying the revisions would interfere with the Board's
ability to perform its statutory duties and would cause public harm if
firms were unable to take full advantage of the emergency relief
provided by the MMLF in response to significant financial industry
disruptions from the containment measures adopted in response to the
public health concerns.
In addition, the Board proposes to extend the FR 2052a for three
years with the revisions discussed above.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) \20\ requires an agency to
consider whether the rules it proposes will have a significant economic
impact on a substantial number of small entities.\21\ The RFA applies
only to rules for which an agency publishes a general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed
previously, consistent with section 553(b)(B) of the APA, the agencies
have determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the agencies are not
issuing a notice of proposed rulemaking. Accordingly, the agencies have
concluded that the RFA's requirements relating to initial and final
regulatory flexibility analysis do not apply.
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\20\ 5 U.S.C. 601 et seq.
\21\ Under regulations issued by the Small Business
Administration, a small entity includes a depository institution,
bank holding company, or savings and loan holding company with total
assets of $600 million or less and trust companies with total assets
of $41.5 million or less. See 13 CFR 121.201.
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Nevertheless, the agencies seek comment on whether, and the extent
to which, the interim final rule would have a significant economic
impact on a substantial number of small entities.
E. Riegle Community Development and Regulatory Improvement Act of 1994
Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\22\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), each Federal banking agency
must consider, consistent with the principle of safety and soundness
and the public interest, any administrative burdens that such
regulations would place on depository institutions, including small
depository institutions, and customers of depository institutions, as
well as the benefits of such regulations. In addition, section 302(b)
of the RCDRIA requires new regulations and amendments to regulations
that impose additional reporting, disclosures, or other new
requirements on IDIs generally to take effect on the first day of a
calendar quarter that begins on or after the date on which the
regulations are published in final form, with certain exceptions,
including for good cause.\23\ For the reasons described above, the
agencies find good cause exists under section 302 of the RCDRIA to
publish the interim final rule with an immediate effective date.
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\22\ 12 U.S.C. 4802(a).
\23\ 12 U.S.C. 4802.
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As such, the interim final rule will be effective immediately.
Nevertheless, the agencies seek comment on the RCDRIA.
F. Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act \24\ requires the Federal
banking agencies to use plain language in all proposed and final rules
published after January 1, 2000. The agencies have sought to present
the interim final rule in a simple and straightforward manner. The
agencies invite comments on whether there are additional steps it could
take to make the rule easier to understand. For example:
---------------------------------------------------------------------------
\24\ 12 U.S.C. 4809.
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Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the regulation clearly stated? If
not, how could the regulation be more clearly stated?
Does the regulation contain language or jargon that is not
clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand? What else could we do to make the regulation
easier to understand?
G. OCC Unfunded Mandates Reform Act of 1995 Determination
As a general matter, the Unfunded Mandates Reform Act of 1995
(UMRA), 2 U.S.C. 1531 et seq., requires the preparation of a budgetary
impact statement before promulgating a rule that includes a Federal
mandate that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year. However, the UMRA does not apply to
final rules for which a general notice of proposed rulemaking was not
published.\25\ Therefore, because the OCC has found good cause to
dispense with notice and comment for the interim final rule, the OCC
has not prepared an economic analysis of the rule under the UMRA.
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\25\ See 2 U.S.C. 1532(a).
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List of Subjects
12 CFR Part 50
Administrative practice and procedure, Banks, Banking, Reporting
and recordkeeping requirements, Savings associations.
12 CFR Part 249
Administrative practice and procedure, Banks, Banking, Holding
companies, Reporting and recordkeeping requirements.
12 CFR Part 329
Administrative practice and procedure, Banks, Banking, Reporting
and recordkeeping requirements.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons stated in the preamble, the Office of the
Comptroller of the Currency amends part 50 of chapter I of title 12,
Code of Federal Regulations as follows:
PART 50--LIQUIDITY RISK MEASUREMENT STANDARDS
0
1. The authority citation for part 50 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 93a, 481, 1818, 1828, and 1462
et seq.
[[Page 26841]]
0
2. Amend Sec. 50.3 by adding the definition of Covered Federal Reserve
Facility Funding, in alphabetical order, to read as follows:
Sec. 50.3 Definitions.
* * * * *
Covered Federal Reserve Facility Funding means a non-recourse loan
that is extended as part of the Money Market Mutual Fund Liquidity
Facility or Paycheck Protection Program Liquidity Facility authorized
by the Board of Governors of the Federal Reserve System pursuant to
section 13(3) of the Federal Reserve Act.\1\
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\1\ The Money Market Mutual Fund Liquidity Facility was
authorized on March 18, 2020, and the Paycheck Protection Program
Liquidity Facility was authorized on April 6, 2020.
---------------------------------------------------------------------------
* * * * *
0
3. Add Sec. 50.34 to read as follows:
Sec. 50.34 Cash flows related to Covered Federal Reserve Facility
Funding.
(a) Treatment of Covered Federal Reserve Facility Funding.
Notwithstanding any other section of this part and except as provided
in paragraph (b) of this section, outflow amounts and inflow amounts
related to Covered Federal Reserve Facility Funding and the assets
securing Covered Federal Reserve Facility Funding are excluded from the
calculation of a national bank's or Federal savings association's total
net cash outflow amount calculated under Sec. 50.30.
(b) Exception. To the extent the Covered Federal Reserve Facility
Funding is secured by securities, debt obligations, or other
instruments issued by the national bank or Federal savings association
or one of its consolidated subsidiaries, the Covered Federal Reserve
Facility Funding is not subject to paragraph (a) of this section and
this outflow amount must be included in the national bank's or Federal
savings association's total net cash outflow amount calculated under
Sec. 50.30.
Board of Governors of the Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons stated in the Supplementary Information, the Board
of Governors of the Federal Reserve System amends 12 CFR chapter II as
follows:
PART 249--LIQUIDITY RISK MEASUREMENT STANDARDS (REGULATION WW)
0
4. The authority citation for part 249 continues to read as follows:
Authority: 12 U.S.C. 248(a), 321-338a, 481-486, 1467a(g)(1),
1818, 1828, 1831p-1, 1831o-1, 1844(b), 5365, 5366, 5368; 12 U.S.C.
3101 et seq.
0
5. Amend Sec. 249.3 by redesignating footnotes 1 and 2 as footnotes 2
and 3 and adding the definition of Covered Federal Reserve Facility
Funding, in alphabetical order, to read as follows:
Sec. 249.3 Definitions.
* * * * *
Covered Federal Reserve Facility Funding means a non-recourse loan
that is extended as part of the Money Market Mutual Fund Liquidity
Facility or Paycheck Protection Program Liquidity Facility authorized
by the Board pursuant to section 13(3) of the Federal Reserve Act.\1\
---------------------------------------------------------------------------
\1\ The Money Market Mutual Fund Liquidity Facility was
authorized on March 18, 2020, and the Paycheck Protection Program
Liquidity Facility was authorized on April 6, 2020.
---------------------------------------------------------------------------
* * * * *
0
6. Add Sec. 249.34 to read as follows:
Sec. 249.34 Cash flows related to Covered Federal Reserve Facility
Funding.
(a) Treatment of Covered Federal Reserve Facility Funding.
Notwithstanding any other section of this part and except as provided
in paragraph (b) of this section, outflow amounts and inflow amounts
related to Covered Federal Reserve Facility Funding and the assets
securing Covered Federal Reserve Facility Funding are excluded from the
calculation of a Board-regulated institution's total net cash outflow
amount calculated under Sec. 249.30.
(b) Exception. To the extent the Covered Federal Reserve Facility
Funding is secured by securities, debt obligations, or other
instruments issued by the Board-regulated institution or one of its
consolidated subsidiaries, the Covered Federal Reserve Facility Funding
is not subject to paragraph (a) of this section and this outflow amount
must be included in the Board-regulated institution's total net cash
outflow amount calculated under Sec. 249.30.
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the joint preamble, chapter III of
title 12 of the Code of Federal Regulations is amended as follows:
PART 329--LIQUIDITY RISK MEASUREMENT STANDARDS
0
7. The authority citation for part 329 continues to read as follows:
Authority: 12 U.S.C. 1815, 1816, 1818, 1819, 1828, 1831p-1,
5412.
0
8. Amend Sec. 329.3 by redesignating footnotes 1 and 2 as footnotes 2
and 3 and adding the definition of Covered Federal Reserve Facility
Funding, in alphabetical order, to read as follows:
Sec. 329.3 Definitions.
* * * * *
Covered Federal Reserve Facility Funding means a non-recourse loan
that is extended as part of the Money Market Mutual Fund Liquidity
Facility or Paycheck Protection Program Liquidity Facility authorized
by the Board of Governors of the Federal Reserve System pursuant to
section 13(3) of the Federal Reserve Act.\1\
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\1\ The Money Market Mutual Fund Liquidity Facility was
authorized on March 18, 2020, and the Paycheck Protection Program
Liquidity Facility was authorized on April 6, 2020.
---------------------------------------------------------------------------
* * * * *
0
9. Add Sec. 329.34 to read as follows:
Sec. 329.34 Cash flows related to Covered Federal Reserve Facility
Funding.
(a) Treatment of Covered Federal Reserve Facility Funding.
Notwithstanding any other section of this part and except as provided
in paragraph (b) of this section, outflow amounts and inflow amounts
related to Covered Federal Reserve Facility Funding and the assets
securing Covered Federal Reserve Facility Funding are excluded from the
calculation of a FDIC-supervised institution's total net cash outflow
amount calculated under Sec. 329.30.
(b) Exception. To the extent the Covered Federal Reserve Facility
Funding is secured by securities, debt obligations, or other
instruments issued by the FDIC-supervised institution or one of its
consolidated subsidiaries, the Covered Federal Reserve Facility Funding
is not subject to paragraph (a) of this section and this outflow amount
must be included in the FDIC-supervised institution's total net cash
outflow amount calculated under Sec. 329.30.
Brian P. Brooks,
First Deputy Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System.
Ann Misback,
Secretary of the Board.
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
[[Page 26842]]
Dated at Washington, DC, on or about April 30, 2020.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2020-09716 Filed 5-5-20; 8:45 am]
BILLING CODE 6210-01-P 4810-33-P; 6714-01-P