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B-332129 1 (2020-05-04)

handle is hein.gao/gaobaebeb0001 and id is 1 raw text is: c AO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-332129 May 4, 2020 The Honorable Mike Crapo Chairman The Honorable Sherrod Brown Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Maxine Waters Chairwoman The Honorable Patrick McHenry Ranking Member Committee on Financial Services House of Representatives Subject: Department of the Treasury, Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation: Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans Pursuant to section 801 (a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of the Treasury, Office of the Comptroller of the Currency; Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (collectively, the agencies) entitled Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans (RINs: 1557-AE90, 7100- AF86, 3064-AF49). We received the rule on April 20, 2020. It was published in the Federal Register as an interim final rule, request for comment on April 13, 2020. 85 Fed. Reg. 20387. The effective date of the rule is April 13, 2020. The rule also applies to certain loans originated beginning on April 3, 2020, and pledged to Federal Reserve Banks (Banks) in connection with the Paycheck Protection Program Lending Facility (PPPL Facility). According to the agencies, the interim final rule amends the agencies' capital rules for banking organizations. According to the agencies, the amendment facilitates use of the PPPL Facility authorized by the Board. The agencies stated that, under the PPPL Facility, each of the Banks will extend non-recourse loans to institutions to fund Small Business Administration guaranteed loans covered under the Paycheck Protection Program (PPP). The agencies asserted that Congress created PPP as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), in recognition of the exigent circumstances faced by small businesses. Pub. L. No. 116-136, 134 Stat. 281 (Mar. 27, 2020). According to the agencies, as a function of participating in the PPPL Facility, a banking organization must originate and hold PPP covered loans on its balance sheet. The agencies observed that, as a result, participating banking organizations could potentially be subject to increased regulatory capital requirements. The agencies asserted that these requirements do not reflect the substantial protections from credit

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