Washington Update

March 27, 2020

Today, President Trump signed the CARES Act, providing relief to the American economy. This is the third aid package from Congress meant to support businesses during the COVID-19 pandemic. At each stage, our team in Washington has reviewed the legislation and we want to highlight a few portions that are most relevant for our members. To review a full analysis of the bill click here.

The Fed released initial program rules for a primary market credit facility on Monday, but these rules – including the limit to investment grade credit – are likely to change in light of the CARES Act. New guidelines for the program as set forth in the CARES Act are attached. Please note, however, that Treasury and the Fed retain broad authority under the CARES Act and section 13(3) of the Federal Reserve Act. There are many details to be worked out; the OLA will be working with the Fed and Treasury in the coming days and weeks to advance our members’ priorities.

For our larger members, please note the Fed also established (or re-established, as it existed in 2009) the Term ABS Lending Facility (TALF). Program details are here. It appears the Fed took the 2009 program off the shelf. As there was no robust installment lending industry in 2009, TALF collateral does not presently include installment loans ABS. Yet there is an urgent need for liquidity in the consumer loan market for pricing and a variety of other issues. OLA is working with the Fed and Treasury to ensure that high quality installment loan ABS is eligible for pledge.

Separately, for small business, the SBA fund is for employers with 500 or fewer employees. Under that program, businesses can get loans for payroll and rent, and a portion of those loans is forgivable. They also have a lender match program for small businesses to find the best options for them. To learn more about that program, click here.

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