Regulators Exploring Asset Threshold Relief for Banks Participating in COVID-19 Programs

Regulators are exploring additional ways to provide temporary relief to banks that may be approaching regulatory asset thresholds that could trigger additional compliance requirements as a result of participation in COVID-19 relief programs like the Paycheck Protection Program.

In testimony before the Senate Banking Committee on Tuesday, Acting Comptroller of the Currency Brian Brooks said that regulators are working on an interagency basis “on a set of rules that would relieve for a period of time certain asset thresholds being tripped that would trigger heightened scrutiny and heightened compliance requirements at different levels.” Brooks signaled that this relief would “cap out at $10 billion, most likely, based on current conversations.”

FDIC Chairman Jelena McWilliams added that “small banks have done a disproportionate amount of lending to their proportion of the banking industry share” and that “it’s only appropriate that we look at these thresholds . . . and accommodate them.” The FDIC last month approved an interim final rule providing relief from auditing, internal control and audit committee requirements that would have resulted from the rapid inflow of assets and deposits from the coronavirus pandemic.

Brooks also emphasized that any relief of this nature should be temporary. “On the one hand, we must accommodate the dislocations created by the COVID-19 pandemic situation,” Brooks said. “But at the same time, it’s important that those things be wound down just as soon as the pandemic ends because it’s important as supervisors that we have real visibility into the balance sheet risks created by those assets over time.”