COVID-19: State and Federal Responses Updates
Tuesday, May 26, 2020
There are 5,559,130 confirmed COVID-19 cases in 188 countries/regions, including 1,679,419 in the U.S. 1,924,231 of those cases have recovered. o 14,907,041 people have been tested in the U.S.
The NYSE’s trading floor reopens and now features plexiglass barriers to keep traders apart, with the number of traders on the floor limited to a quarter of the usual, and masks required. Traders are also required to avoid public transit.
Federal: This week, the House will consider two bills regarding coronavirus aid: o Small Business Funding and Report: The Small Business Administration would be required to issue a public report on entities that received more than $2 million in small business aid under coronavirus relief laws. The bill also would set a lending total for the SBA’s traditional 7(a) small business loan program in fiscal 2020 that’s separate from the lending authority for the PPP. That would allow the 7(a) program to continue if PPP funds are exhausted.
Paycheck Protection Program Loans: Several restrictions on companies that borrow money through the PPP would be relaxed. The bill would lengthen the current eight-week period during which businesses must use funds to have loans forgiven to 24 weeks or December 31, whichever comes sooner; allow businesses to repay loans over five years instead of two, scrap a rule that no more than 25% of proceeds can be spent on expenses; and extend the deadline to apply for a PPP loan to December 31 from June 30. A similar bill with bipartisan support in the Senate would extend the deadline to apply for a loan to the end of the year from June 30, while doubling the current eight-week period in which businesses must use money to have loans forgiven.
According to the analysis of data from COVID-19 Tracking Project, a volunteer-run effort to track the outbreak, twenty states have reported an increase in news cases of COVID-19 for the week ending on May 24th: South Carolina had the biggest weekly increase at 42%; Alabama’s new cases rose 28% from the previous week; Missouri’s rose 27%; North Carolina’s rose 26%; and New cases in Georgia, one of the first states to reopen, rose 21% after two weeks of declines.
Main Street Lending Program: Federal Reserve Bank of Boston President Eric Rosengren said he expects companies to begin receiving money through the central bank’s long-awaited Main Street Lending Program within two weeks. “This is a program that’s just starting up so we’re expecting to have the loan documents up this week,” Rosengren said Sunday on CBS’ “Face the Nation.” “We then have to register the banks, and then we’re going to be ready to start issuing the loans.”
Paycheck Protection Program (PPP): On Friday, the Small Business Administration and Treasury Department released new PPP guidance that builds on the loan forgiveness application and instructions that were released on May 15, but they don’t make changes to either the eight-week period during which PPP funds must be spent to qualify for loan forgiveness or the rule requiring PPP borrowers to spend at least 75% of the funds on payrolls costs to qualify for full loan forgiveness. The Small Business Administration said it has approved $512.2 billion as of May 21 in Paycheck Protection Program loans, leaving $150 billion in the $660 billion allocated to the program as demand for the loans dries up. Net weekly lending through the program has been negative since mid May, according to SBA data, as some companies returned loans and fewer companies applied for them.
Phase 4 Stimulus Package: Expect talks to start gaining steam in June. By that time, the effectiveness of the Federal Reserve’s new emergency powers and the return to operations of some non-essential businesses could weigh heavily on the next steps. There appears to be bipartisan momentum behind certain provisions in the House-passed response bill, including tweaking the employee retention credit to make it more usable, providing further financial assistance through the tax code to help businesses cover fixed costs during shelter-in-place orders, and loosening IRS rules on deductions related to loans issued under the Paycheck Protection Program. Less clear is whether Republicans would agree to another round of direct payments to Americans, something they viewed as an emergency bridge to increased unemployment benefits. White House economic adviser Larry Kudlow said he doesn't believe the $600 weekly addition to unemployment payments will be extended beyond the current July 31 deadline in the next coronavirus relief bill, instead saying that the Administration is weighing proposals that would give cash incentives to unemployed Americans to return to work.
Proxy Voting: Speaker Nancy Pelosi (D-CA) announced last week the House will begin using the emergency proxy voting procedures that were approved earlier. Members of the House in attendance may cast votes for as many as 10 of their peers under their colleagues’ written instructions. The House Sergeant at Arms and Attending Physician released updated guidance on general safety and voting procedures.
In addition to the COVID-19 related bills, the House will consider FISA and a number of bills under suspension from the Judiciary, Foreign Affairs, and the Veterans’ Affairs Committees.
Virtual Hearings 1. Worker Protections: The House Education and Labor Committee holds a hearing entitled, “Examining the Federal Government’s Actions to Protect Workers from COVID-19."
2. Small Business Virtual Forum: The House Small Business Committee plans a virtual forum Thursday to discuss priorities for the next phase of recovery and how to leverage the Small Business Development Center Network.
Senate: The Senate is adjourned until June 1.
President Trump vowed to move the Republican National Convention from North Carolina unless Governor Roy Cooper (D) guarantees that the party will be allowed full attendance regardless of pandemic restrictions. The Governors of Florida and Georgia have both offered to host. “Plans are being made by many thousands of enthusiastic Republicans,” Trump said in the tweets. “They must be immediately given an answer by the Governor as to whether or not the space will be allowed to be fully occupied. If not, we will be reluctantly forced to find, with all of the jobs and economic development it brings, another Republican National Convention site.
As of today, all states except for two have begun the process of reopening.
When each state issues a “stay at home”, “shelter in place” or “non-essential business closure” order, we are advocating for them to follow federal CISA guidelines for essential infrastructure. The financial services sector is considered essential and has been included on all orders that are currently active.
The following states have issued an order:
Arizona Alabama Alaska California
Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois
Indiana Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri
Montana Nevada New Jersey New Mexico New York North Carolina Ohio Oklahoma Oregon Pennsylvania
Rhode Island South Carolina Tennessee Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
SIFMA has created a page with updates on BCP and COVID-19, with industry guidance, regulator updates, and government resources. FINRA: o Cancelled their annual conference. o Has a list of state stay at home orders. o Issued a Regulatory Notice outlining guidance for Pandemic-Related Business Continuity Planning. o Issued a Technical Notice to alert members to its efforts to maintain business continuity with respect to its Trade Reporting Facilities and its Alternative Display Facility as well as to remind members of their obligations with regard to OTC trading and reporting in the event the members experience systems issues in their own or their vendor’s systems. o Suspended in-person arbitration hearings until July. o Postponed hearings of Disciplinary Proceedings scheduled through April with the exception of pending Expedited Proceedings, as they are not conducted in person. o Guidance on FINRA-Administered exams. Prometric closed testing centers in the U.S. and Canada for a period of 30 days, starting March 18, 2020. Existing appointments will be rescheduled. To change an existing appointment scheduled over 30 days (April 16 or later) or to schedule a new appointment, please access the Prometric website. FINRA will extend all enrollment windows that are currently open for candidates who want to take exams and that are scheduled to expire by the end of May. Each FINRA administered exam enrollment end date will be extended through the same end date of May 31, 2020. The SEC: o Announced that Reg BI implementation will not be delayed. o Issued an order that provides publicly traded companies an additional 45 days to file certain disclosure reports that would have been due between March 1, 2020 and April 30, 2020. The relief is conditional on companies meeting certain requirements, including an explanation of why the relief is needed. o Issued a statement on the effects of Coronavirus on Financial Reporting that encouraged firms to work with their audit committee and auditors to disclose potential exposure to the effects of COVID-19, including how they plan for and will respond to unfolding events and disclosure of subsequent events. Disclosure of material risks to business and operations is intended to keep investors and markets informed of material developments. o Will consider comments submitted after a comment period closes and allow additional time for comments on select pending actions. https://www.sec.gov/sec-coronavirus-covid-19-response o Temporarily relaxed implementation requirements of consolidated audit trail (CAT) systems so that market participants and broker/dealers can focus energy and resources on business continuity plans, operational readiness and reducing operational risk stemming from the pandemic
https://www.sec.gov/news/publicstatement/statement-clayton-cat-covid-19-nal-cybersecurity-2020-03-17; suspended CAT compliance enforcement through May 20, 2020. o Addressed the need to grant extensions to or relief from certain delivery and filing obligations https://www.sec.gov/news/press-release/2020-53, https://www.sec.gov/news/press-release/202062, https://www.sec.gov/news/press-release/2020-63, https://www.sec.gov/rules/other/2020/34-88318.pdf o Providing conditional relief for certain in-person meeting and advance notice requirements https://www.sec.gov/investment/staff-statement-im-covid-19, https://www.sec.gov/news/press-release/202062, https://www.sec.gov/news/press-release/2020-63
This material was prepared by LPL Financial.