Financial regulators in the United States have been rightly preoccupied with addressing the COVID-19 crisis, as have many. However, time does not stop, and comment periods that began before the crisis are approaching their end dates. Last week regulators extended two comment period deadlines to account for COVID-19-related issues.
Volcker Rule Proposal
First, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the Office of the Comptroller of the Currency, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (collectively, the “Agencies”) had proposed revisions to the covered funds provisions of the Volcker Rule on January 30, 2020.1 The proposal was intended to address the prohibitions and restrictions regarding covered fund activities in the same way that the Agencies’ August 2019 rulemaking primarily focused on the Volcker Rule’s restrictions on proprietary trading.
The comment period for the Volcker Rule proposal ended on April 1, 2020, and it appears that at least 23 comment letters were submitted by that date.2 On April 2, 2020, the Agencies released a statement indicating that they would informally extend the comment period until May 1, 2020 to “provide interested persons more time to analyze the issues and prepare their comments in light of potential disruptions resulting from the coronavirus.”3
Brokered Deposits Proposal
Second, the FDIC proposed revisions to the restrictions on brokered deposits on December 12, 2019.4 The proposal was intended to modernize the FDIC’s framework for brokered deposits, and would revise both the substantive regulations for brokered deposits and the procedures for requesting exceptions and filing reports.
The comment period for the brokered deposits proposal will end on April 10, 2020, and it appears that at least 20 comment letter have been submitted to date.5 On April 3, 2020, the FDIC extended the comment period until June 9, 2020 to “provide bankers and other interested parties additional time in light of challenges associated with COVID-19.”6
To date, US financial regulators have shown flexibility and reasonableness in addressing COVID-19-related issues. In some cases this has meant taking action more quickly than normally.7 In other cases this has meant extending deadlines or accepting late submissions.8 Agency principals also have recognized that COVID-19 may require further extensions of comment periods.9
The two extensions issued last week are in keeping with US regulators’ flexible response to COVID-19 and are likely to be welcomed by industry. Additionally, several of the Democratic leaders in the House of Representatives, among others, have asked the Acting Director of the Office of Management and Budget to postpone any public comment deadlines “by at least 45 days beyond the end of the declared national emergency” to enable the public to comment on proposed regulations.10 We expect to see other, case-by-case extensions as the crisis progresses, and encourage financial institutions to work with their counsel and through trade associations to communicate these needs to regulators.
If you have any questions about this these extensions, or about the US financial regulators’ responses to COVID-19 more generally, please contact Jeffrey P. Taft, Marlon Paz, Leslie S. Cruz, Adam D. Kanter, or Matthew Bisanz. We will continue to keep our clients updated on any future significant announcements regarding COVID-19.
These comment period extensions are part of an evolving COVID-19 response that is moving across regulatory agencies. Please visit our website to learn more.
1 85 Fed. Reg. 12,120 (Feb. 28, 2020). See our Legal Update on the Volcker Rule proposal: https://www.mayerbrown.com/en/perspectives-events/publications/2020/02/us-agencies-proposed-revisions-to-volcker-rule-covered-funds-provisions.
2 FRB, FOIA Comments (retrieved Apr. 6, 2020), https://www.federalreserve.gov/apps/foia/ViewAllComments.aspx?doc_id=R-1694&doc_ver=1.
3 Agencies will consider comments on Volcker rule modifications following expiration of comment period (Apr. 2, 2020), https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200402a.htm.
4 85 Fed. Reg. 7453 (Feb. 10, 2020). See our Newsletter addressing the brokered deposits proposal: https://www.mayerbrown.com/en/perspectives-events/publications/2020/01/reverseinquiries.
5 FDIC, Comments (retrieved Apr. 6, 2020), https://www.fdic.gov/regulations/laws/federal/2020/2020-unsafe-unsound-banking-practices-brokered-deposits-3064-ae94.html.
6 FDIC Extends Comment Period Related to the Proposed Revisions to the Brokered Deposits Rules, FIL-34-2020 (Apr. 3, 2020), https://www.fdic.gov/news/news/financial/2020/fil20034.html.
7 E.g., Federal Reserve Board announces temporary change to its supplementary leverage ratio rule to ease strains in the Treasury market resulting from the coronavirus and increase banking organizations’ ability to provide credit to households and businesses (Apr. 1, 2020), https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200401a.htm.
8 E.g., 85 Fed. Reg. 17,299 (Mar. 27, 2020) (CFPB extension for FDCPA rulemaking); FDIC, Statement on Part 363 Annual Reports in Response to the Coronavirus, FIL-30-2020 (Mar. 27, 2020), https://www.fdic.gov/news/news/financial/2020/fil20030.html.
9 Allison Herren Lee, Regulatory Priorities and COVID-19 (Apr. 3, 2020), https://www.sec.gov/news/public-statement/statement-lee-regulatory-priorities-covid-19-2020-04-03.
10 House Committee Chairs Request Extension of Public Comment Periods During Coronavirus National Emergency (Apr. 1, 2020), https://energycommerce.house.gov/newsroom/press-releases/house-committee-chairs-request-extension-of-public-comment-periods-during; see also, Cheryl Bolen, Trump Pressured to Halt Regulatory Agenda Except for Virus Rules, BloombergLaw (Apr. 2, 2020), https://news.bloomberglaw.com/daily-labor-report/trump-pressured-to-halt-regulatory-agenda-expect-for-virus-rules.