OCC Bulletin 2020-96| November 3, 2020

Capital and Liquidity Treatment for Money Market Liquidity Facility and Paycheck Protection Program: Final Rule

To

Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties

Summary

On October 28, 2020, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (collectively, the agencies) jointly issued a final rule confirming three sets of revisions to the agencies’ regulatory capital and liquidity rules.1 The rule finalizes without changes the Money Market Liquidity Facility interim final rule issued on March 19, 2020; the Paycheck Protection Program (PPP) interim final rule issued on April 9, 2020; and the liquidity coverage ratio interim final rule issued on May 6, 2020.2 The final rule is effective for banks3 on December 28, 2020.

Rescissions

This bulletin replaces and rescinds

  • OCC Bulletin 2020-18, "Money Market Liquidity Facility: Interim Final Rule."
  • OCC Bulletin 2020-36, "Capital Treatment for Paycheck Protection Program: Interim Final Rule."
  • OCC Bulletin 2020-48, "Liquidity Coverage Ratio: Interim Final Rule Addressing Treatment of Certain Emergency Facilities."

Note for Community Banks

This final rule applies to community banks if they participate in the Money Market Liquidity Facility or originate loans under section 1102 (Paycheck Protection Program) of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Highlights

The final rule supports banks' originations of PPP loans under the CARES Act and participation in the PPP Liquidity Facility and Money Market Liquidity Facility by

  • permitting a zero percent risk weight for PPP loans.
  • neutralizing the regulatory capital impact for participating in the PPP Liquidity Facility and Money Market Liquidity Facility.
  • for banks subject to the liquidity rule, neutralizing the impact of participating in the Money Market Liquidity Facility or PPP Liquidity Facility.

Further Information

Money Market Liquidity Facility and PPP: Please contact Margot Schwadron, Director for Capital Policy, or Andrew Tschirhart, Risk Expert for Capital Policy, at (202) 649-6370; or Carl Kaminski, Special Counsel, or Chris Rafferty, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490.

Liquidity coverage ratio: Please contact Christopher McBride, Director, or James Weinberger, Technical Expert, Treasury and Market Risk Policy, at (202) 649-6360; or Henry Barkhausen, Counsel, or Daniel Perez, Senior Attorney, Chief Counsel’s Office, at (202) 649-5490.

 

Jonathan V. Gould
Senior Deputy Comptroller and Chief Counsel

Related Link

1 12 CFR 3 (regulatory capital rule) and 12 CFR 50 (liquidity rule).

2 Refer to 85 Fed. Reg. 16232 (March 23, 2020); 85 Fed. Reg. 20387 (April 13, 2020); and 85 Fed. Reg. 26835 (May 6, 2020).

3 "Banks" refers to national banks and federal savings associations.