A roundup of regulatory guidance and policy implications impacting the economy and consumer
To encourage adequate reserves through the COVID crisis among the biggest banks, the Federal Reserve has announced it is extending the limit on capital distributions through the end of 2020. Impacting the 34 largest banks in the U.S., the move means “the likes of JPMorgan Chase, Citigroup, Wells Fargo and Bank of America will be barred from share buybacks and will have to cap dividends,” according to CNBC. The Fed took the extraordinary step in June citing significant potential capital losses following a banking stress test. The policy applies to financial institutions with at least $100 billion in assets.
Amid pushback from the banking sector, a House committee begins hearings this week on a potential special purpose national banking charter for payments companies like Amazon or Facebook, proposed by an administration official in July. Industry leaders including the American Bankers Association (ABA), the Credit Union National Association (CUNA), and the Bank Policy Institute believe non-banks increase risk in the banking sector, stating “Commercial companies accessing a payments charter would avoid oversight and regulations that protect the financial system and consumers.”
As the U.S. Treasury begins the process of forgiving PPP loans, 10 trade groups – including ABA, CUNA, and the Independent Community Bankers of America (ICBA), among others – are urging additional Congressional action on PPP to further bolster America’s struggling small businesses. They say, “At the heart of our recovery is the ability for small businesses, which employ tens of millions of people, to pay their employees and maintain their monthly expenses.” The letter comes as the House and White House resume talks for a second bipartisan stimulus plan.