Policy & Regulation

The Federal Reserve and other regulators are planning to grant a sweeping capital break for banks providing loans to small businesses as part of the government's response to the coronavirus-fueled economic crisis.

The bank will be allowed to exceed the limit to enable it to make more small business loans; the CEOs of HSBC and StanChart are also donating part of their pay to coronavirus victim charities.

With the government pumping trillions of new spending into the economy, experts are questioning the Federal Reserve's ability to keep prices stable.

A bipartisan group of lawmakers wrote in a letter to the Treasury secretary that the Financial Stability Oversight Council should create a liquidity facility to deal with a flood of forbearance requests brought on by the coronavirus pandemic.

They have asked the Financial Crimes Enforcement Network, the chief anti-money-laundering regulator, to let them collect customer information and verify it after the loan application is processed in order to speed approvals.

Community advocates would like to see changes to the 1977 Community Reinvestment Act, but say regulators should suspend such efforts until the coronavirus pandemic has passed.

Lenders and community groups say it's a mistake for the banking agencies to move forward during a national crisis. But Comptroller of the Currency Joseph Otting says updated Community Reinvestment Act rules would speed relief to neighborhoods and small businesses.

The Federal Reserve is temporarily altering the growth restriction it placed on Wells Fargo in 2018 so that the bank can make additional loans to small and midsize business that need funding to weather the coronavirus pandemic.

The lending facility is for companies with more than 500 employees that are disqualified from the relief program for small businesses and too small for federal loans reserved for larger companies.

Lawmakers want to expand the two-day old small business loan program by another $250 billion; Calabria says nonbanks are exaggerating their financial woes as forbearance claims rise.