Regulatory Alerts2020-04-13 | 2020-07712Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans
The Office of the Comptroller of the Currency, Federal Reserve Board, and FDIC issued an interim final rule that allows banking organizations to neutralize the regulatory capital effects of participating in the Paycheck Protection Program Lending Facility. The rule permits eligible institutions to exclude SBA-guaranteed PPP loans pledged as collateral from their leverage and risk-based capital calculations, while simultaneously mandating a zero percent risk weight for all originated PPP loans. This immediate regulatory relief stabilizes financial system liquidity and ensures small businesses receive critical pandemic-era financing without imposing additional capital burdens on lenders.
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