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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