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Has temporary regulatory burden relief been provided to community banks that exceeded, or may exceed, certain regulatory asset thresholds due, in large part, to their participation in government programs established in response to the COVID-19 pandemic?

Has temporary regulatory burden relief been provided to community banks that exceeded, or may exceed, certain regulatory asset thresholds due, in large part, to their participation in government programs established in response to the COVID-19 pandemic?

Yes. On November 20, 2020, the FDIC Board of Directors adopted, with immediate effect, an interim final rule to provide temporary regulatory burden relief to certain insured depository institutions that exceeded, or may exceed, certain regulatory asset thresholds due, in large part, to their participation in government programs established in response to the COVID-19 pandemic (e.g., the Paycheck Protection Program (PPP), among others). The rule, issued with the FRB and OCC, amends certain rules to provide temporary relief to banks with $10 billion or less in total consolidated assets as of December 31, 2019. Highlights of the interim final rule include:

  • Some insured banks have experienced large cash inflows resulting from participation in the PPP, the Paycheck Protection Program Liquidity Facility, the Money Market Mutual Liquidity Fund, or other factors, such as the effects of other government stimulus efforts.
  • The rule generally provides temporary relief to insured banks with under $10 billion in total assets as of December 31, 2019, by allowing them to calculate asset size for applicable thresholds during calendar years 2020 and 2021 based on the lower of either total assets as of December 31, 2019 or total assets as of the normal measurement date.
  • For FDIC-supervised institutions, the temporary relief applies to:
    • Eligibility for the community bank leverage ratio (CBLR) framework ($10 billion);
    • Thresholds in the FDIC’s rule regarding management official interlocks ($10 billion, $100 million, and $50 million);
    • Eligibility for reduced reporting on the FFIEC 051 Call Report ($5 billion); and
    • Thresholds concerning the frequency of examinations ($3 billion) for domestic banks and insured branches of foreign banks.
  • The temporary relief expires on December 31, 2021.
  • The agencies reserve the authority, with respect to the CBLR and management interlocks rules, to determine, in limited circumstances, that the regulatory relief would not be appropriate based on an institution’s risk profile.
  • The agencies will be making conforming changes to regulatory reports, in coordination with the Federal Financial Institutions Examination Council, through a separate Federal Register notice.

Interagency Interim Final Rule Provides Regulatory Relief to Institutions Experiencing Temporary Asset Growth in Connection with COVID-19-Related Programs FDIC FIL-108-2020 https://www.fdic.gov/news/financial-institution-letters/2020/fil20108.html

Interim Final Rule: Temporary Asset Thresholds
https://www.fdic.gov/news/board/2020/2020-11-17-notational-fr-a.pdf