Supervisory and Regulatory Actions in Response to COVID-19

One of the principal functions of the Federal Reserve is to supervise and regulate various financial entities. In response to the events related to COVID-19 or the coronavirus, the Federal Reserve Board's Supervision and Regulation function has issued the following statements, guidance, and rules to support financial institutions and the economy.

Supervisory Actions

  • Capital assessment and actions: The Federal Reserve Board on Thursday released the results of its annual bank stress tests, which showed that large banks continue to have strong capital levels and could continue lending to households and businesses during a severe recession. All 23 large banks tested remained well above their risk-based minimum capital requirements and as laid out previously by the Board, the additional restrictions put in place during the COVID event will end. All large banks will be subject to the normal restrictions of the Board's stress capital buffer, or SCB, framework. (June 24, 2021)
    Press release

  • Capital assessment and actions: The Federal Reserve Board announced that the temporary and additional restrictions on bank holding company dividends and share repurchases currently in place will end for most firms after completion of the current round of stress tests on June 30. Firms with capital levels above those required by the stress test will no longer be subject to the additional restrictions as of that date. Firms with capital levels below those required by the stress test will remain subject to the restrictions. (March 25, 2021)
    Press release

  • Shared National Credit Review: Federal banking regulatory agencies issued the Shared National Credit Review, which evaluates the quality of large syndicated loans. (February 25, 2021)
    Press release

  • Capital assessment and actions: The Federal Reserve Board on Friday released a second round of bank stress test results this year, which showed that large banks had strong capital levels under two separate hypothetical recessions. In light of the ongoing economic uncertainty and to preserve the strength of the banking sector, the Board is extending the current restrictions on distributions, with modifications. (December 18, 2020)
    Press release

  • Capital assessments and actions: The Federal Reserve Board announced it will extend for the fourth quarter of 2020 several measures to ensure that large banks maintain a high level of capital resilience. For the fourth quarter of 2020, large banks will be prohibited from making share repurchases, and dividend payments will be capped and tied to a formula based on recent income. (September 30, 2020)
    Press release
     
  • Stress testing: The Federal Reserve Board released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board's first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty from the COVID event. (September 17, 2020)
    Press release

  • Additional accommodations: The Federal Reserve and the other Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement discusses risk management principles relevant to institutions that work with their borrowers as loans near the end of initial loan accommodation periods related to COVID-19. The statement includes principles for considering accommodation options and for restructuring safe and sound credit extensions going forward. The agencies encourage financial institutions to consider prudent accommodation options that can ease cash flow pressures on affected borrowers, improve their capacity to service debt, and facilitate a financial institution's ability to collect on its loans. (August 3, 2020)
    SR 20-18/CA 20-13

  • Capital assessment and actions: The Federal Reserve Board announced several actions following its stress test and a sensitivity analysis to ensure large banks remain resilient despite the economic uncertainty from the coronavirus response. For the third quarter of 2020, the Board is requiring large banks to preserve capital by suspending share repurchases, capping dividend payments, and limiting dividends based on recent income. The Board is also requiring banks to re-evaluate their longer-term capital plans. (June 25, 2020)
    Press release

  • Examiner guidance: The federal financial institution regulatory agencies, in conjunction with the state bank and credit union regulators, issued examiner guidance to promote consistency and flexibility in the supervision and examination of financial institutions affected by the COVID-19 pandemic. (June 23. 2020)
    Press release
    SR letter

  • Examinations: The Federal Reserve Board announced it will resume examination activities for all banks, after previously announcing a reduced focus on exam activity in light of the coronavirus response. (June 15, 2020)
    Press release

  • Small-dollar loans: The federal financial institution regulatory agencies issued principles for offering small-dollar loans in a responsible manner to meet financial institutions’ customers’ short-term credit needs. (May 20, 2020)
    Press release

  • Resolution plans: The Federal Deposit Insurance Corporation and the Federal Reserve Board announced two extensions to upcoming resolution plan deadlines. (May 6, 2020)
    Press release

  • Mergers and acquisitions: Federal Reserve Board announces the public comment period has been extended through June 4, 2020, for the notice by Morgan Stanley of New York, New York, to acquire E*TRADE Financial Corporation of Arlington, Virginia (April 30, 2020)
    Press release

  • Resolution plans: Agencies extend comment period on updates to resolution plan guidance for large foreign banks. (April 27, 2020)
    Press release

  • Small business lending: Due to the extraordinary disruptions from the coronavirus, the Federal Reserve Board on Wednesday announced that it will temporarily and narrowly modify the growth restriction on Wells Fargo so that it can provide additional support to small businesses. The change will only allow the firm to make additional small business loans as part of the Paycheck Protection Program, or PPP, and the Federal Reserve's forthcoming Main Street Lending Program. (April 8, 2020)
    Press release

  • Work with borrowers: The federal financial institution regulatory agencies, in consultation with state financial regulators, issued a revised interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. The revised statement also provides the agencies' views on consumer protection considerations. (April 7, 2020)
    Press release

  • CARES Act: The Federal Reserve is issuing this letter to inform supervised financial institutions about several forms of relief available to small businesses affected by COVID-19 as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. (April 6, 2020)
    SR letter

  • Mortgage servicers: The federal financial institution regulatory agencies and the state financial regulators issued a joint policy statement providing needed regulatory flexibility to enable mortgage servicers to work with struggling consumers affected by the Coronavirus Disease (referred to as COVID-19) emergency. (April 3, 2020)
    Press release

  • Essential workers: The Federal Reserve issued a letter to inform supervised financial institutions and their service providers that the Cybersecurity and Infrastructure Security Agency (CISA) of the Department of Homeland Security has identified essential critical infrastructure workers in the financial services sector. (March 27, 2020)
    SR 20-6 letter

  • Regulatory reporting relief: The Federal Reserve will not take action against a financial institution with $5 billion or less in total assets for submitting its March 31, 2020, Consolidated Financial Statements for Bank Holding Companies (FR Y-9C) or Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding Companies (FR Y-11) after the official filing deadline, as long as the applicable report is submitted within 30 days of the official filing due date. (March 26, 2020)
    Press release

  • Small-dollar loans: Five federal financial regulatory agencies today issued a joint statement encouraging banks, savings associations and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID-19. (March 26, 2020)
    Press release
    SR 20-7 letter

  • Supervisory approach: The Federal Reserve Board provided additional information to financial institutions on how its supervisory approach is adjusting in light of the coronavirus. (March 24, 2020)
    Press release

  • Work with borrowers: The federal financial institution regulatory agencies and the state banking regulators issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. (March 22, 2020)
    Press release

  • Capital and liquidity: The federal banking agencies issued a statement on the use of capital and liquidity buffers. This follows on a March 15 Board statement: "The agencies support banking organizations that choose to use their capital and liquidity buffers to lend and undertake other supportive actions in a safe and sound manner. The agencies expect banking organizations to continue to manage their capital actions and liquidity risk prudently." (March 17, 2020)
    Statement (PDF)

  • Discount window: Federal banking agencies released an interagency statement encouraging banks to use the Federal Reserve's discount window. (March 16, 2020)
    Press release

  • Capital and liquidity: The Federal Reserve encouraged banks to use their capital and liquidity buffers as they lend to households and businesses who are affected by the coronavirus and for banks to use their capital and liquidity buffers to lend and undertake supportive actions in a safe and sound manner. (March 15, 2020)
    Press release

  • Intraday credit: The Federal Reserve issued a statement encouraging depository institutions to utilize intraday credit extended by Reserve Banks, on both a collateralized and uncollateralized basis. (March 15, 2020)
    Press release

  • Work with borrowers: The Federal Reserve Board issued guidance on supervisory practices regarding financial institutions affected by coronavirus. This guidance encourages financial institutions to review guidance previously issued in 2013 with respect to major disasters or emergencies. The 2013 guidance discusses supervisory practices that the Federal Reserve System will employ when financial institutions and their customers are affected by coronavirus and provides examples of efforts that financial institutions may want to consider in working with affected customers. (March 13, 2020)
    SR 20-4 / CA 20-3 letter

Regulatory Actions

  • Small business lending: The Federal Reserve Board announced the third extension of a rule to bolster the effectiveness of the Small Business Administration's (SBA) Paycheck Protection Program (PPP), which applies to PPP loans made from March 31 through June 30, 2021. (May 14, 2021)
    Press release

  • Capital: The federal bank regulatory agencies today announced that the temporary change to the supplementary leverage ratio for depository institutions issued on May 15, 2020, will expire as scheduled on March 31. (March 19, 2021)
    Press release

  • Capital: The Federal Reserve Board on Friday announced that the temporary change to its supplementary leverage ratio for bank holding companies will expire as scheduled on March 31. (March 19, 2021)
    Press release

  • Minority depository institutions and community development financial institutions: The Federal bank regulatory agencies today announced an interim final rule that supports the Treasury Department's implementation of a program established by Congress to make capital investments in minority depository institutions and community development financial institutions. (March 9, 2021)
    Press release

  • Small business lending: The Federal Reserve Board announced the second extension of a rule to bolster the effectiveness of the Small Business Administration's (SBA) Paycheck Protection Program (PPP), which applies to PPP loans made through March 31, 2021. (February 9, 2021)
    Press release

  • Community banking organizations: The federal bank regulatory agencies announced an interim final rule that provides temporary relief for certain community banking organizations related to certain regulations and reporting requirements as a result, in large part, of their growth in size from the coronavirus response. (November 20, 2020)
    Press release
     
  • Capital: The federal bank regulatory agencies announced temporary changes to the supplementary leverage ratio to increase banking organizations' ability to support credit to households and businesses in light of the coronavirus response. (May 15, 2020)
    Press release
     
  • Liquidity: To support the flow of credit to households and businesses, the federal bank regulatory agencies today announced an interim final rule that modifies the agencies' Liquidity Coverage Ratio (LCR) rule to support banking organizations' participation in the Federal Reserve's Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility. (May 5, 2020)
    Press release

  • Reserve requirements: The Federal Reserve Board on Friday announced an interim final rule to amend Regulation D (Reserve Requirements of Depository Institutions) to delete the six-per-month limit on convenient transfers from the "savings deposit" definition. (April 24)
    Press release

  • Appraisals: The federal banking agencies issue an interim final rule to temporarily defer real estate-related appraisals and evaluations under the agencies' interagency appraisal regulations. (April 14, 2020)
    Press release

  • Small business lending: The federal bank regulatory agencies today announced an interim final rule to encourage lending to small businesses through the Small Business Administration's Paycheck Protection Program, or PPP. (April 9, 2020)
    Press release

  • CARES Act, Capital: The federal bank regulatory agencies today announced the issuance of two interim final rules to provide temporary relief to community banking organizations. The agencies are acting to implement Section 4012 of the Coronavirus Aid, Relief, and Economic Security Act, which requires the agencies to temporarily lower the community bank leverage ratio to 8 percent. (April 6, 2020)
    Press release

  • Volcker rule: Five federal financial regulatory agencies on Thursday announced that they will consider comments submitted before May 1, 2020, on their proposal to modify the Volcker rule's general prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as "covered funds." (April 2, 2020)
    Press release

  • Capital: To ease strains in the Treasury market resulting from the coronavirus and increase banking organizations' ability to provide credit to households and businesses, the Federal Reserve Board announced a temporary change to its supplementary leverage ratio rule. (April 1, 2020)
    Press release

  • CECL and CARES Act: The Federal Reserve Board and the other federal banking agencies issued a joint statement to clarify the interaction between the Revised Transition of the Current Expected Credit Losses Methodology for Allowances interim final rule (CECL IFR)1 and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)2 for purposes of regulatory capital requirements. (March 31, 2020)
    SR 20-9 letter

  • Control framework: The Federal Reserve Board announced that it will delay by six months the effective date for its revised control framework. The delay will reduce operational burden and allow institutions to focus on current economic conditions. (March 31, 2020)
    Press release

  • Capital and credit risk: The federal bank regulatory agencies today announced two actions to support the U.S. economy and allow banking organizations to continue lending to households and businesses:
    • Allowing early adoption of a new methodology on how certain banking organizations are required to measure counterparty credit risk derivatives contracts; and
    • Providing an optional extension of the regulatory capital transition for the new credit loss accounting standard (March 27, 2020)
    Press release

  • Work with borrowers: The Federal Reserve Board announced a technical change to support the U.S. economy and allow banks to continue lending to creditworthy households and businesses.

    The interim final rule will phase in gradually, as intended, the automatic restrictions associated with a firm's "total loss absorbing capacity," or TLAC, buffer requirements, if the levels decline. TLAC is an additional cushion of capital and long-term debt that could be used to recapitalize a bank if it is in distress. The change will facilitate the use of firms' buffers to promote lending activity to households and businesses. (March 23, 2020)
    Press release

  • Liquidity: To support the flow of credit to households and businesses, the federal bank regulatory agencies announced an interim final rule to ensure that financial institutions will be able to effectively use a liquidity facility recently launched by the Federal Reserve Board.

    The Board launched the Money Market Mutual Fund Liquidity Facility, or MMLF, to enhance the liquidity and functioning of money markets and to support the economy. The interim final rule modifies the agencies' capital rules so that financial institutions receive credit for the low risk of their MMLF activities, reflecting the fact that institutions would be taking no credit or market risk in association with such activities. The change only applies to activities with the MMLF. (March 19, 2020)
    Press release

  • Capital: The federal banking agencies adopted an interim final rule, effective upon publication in the Federal Register, that revises the definition of eligible retained income. Under the U.S. capital rule, if a banking organization's capital ratios fall within its buffer requirements, the maximum amount of capital distributions and discretionary bonus payments it can make is a function of its eligible retained income. The revised definition of eligible retained income will make any automatic limitations on capital distributions that could apply under the agencies' capital rules more gradual. (March 17, 2020)
    Press release

Consumer-Related Actions

  • Frequently asked questions: CRA Consideration for Activities in Response to COVID-19. The Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have issued Community Reinvestment Act (CRA) frequently asked questions (FAQs) that expand upon information provided in the Joint Statement (issued on March 19, 2020). The FAQs clarify how agencies will consider activities responsive to community needs during the COVID-19 emergency. (March 5, 2021)
    CA 21-5 letter

  • CARES Act examination procedures: The Federal Reserve developed examination procedures for the credit reporting and mortgage servicing provisions of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). (July 7, 2020)
    CA 20-11 letter

  • HMDA reporting: The Federal Reserve announced that it does not intend to cite in an examination or initiate an enforcement action for failure to report the quarterly Home Mortgage Disclosure Act (HMDA) data to provide its supervised financial institutions with flexibility, reduce administrative burden, and allow the institution to focus its time and attention on serving its customers. (March 31, 2020)
    CA 20-6 letter

  • CRA consideration for activities: The Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued a joint statement on Community Reinvestment Act (CRA) consideration for activities in response to the COVID-19. (March 19, 2020)
    CA 20-4 letter

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Last Update: July 09, 2021