Once it became clear that the coronavirus (COVID-19) outbreak would have serious financial ramifications, the federal agencies that regulate banks and credit unions—the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and Consumer Financial Protection Bureau (CFPB) (collectively referred to as the bank regulators), and the National Credit Union Administration (NCUA)—responded using existing authorities in two broad ways:

The regulators have also issued rulemakings pursuant to Sections 1102, 4003, and 4012 of the CARES Act. Those sections of the law are described in CRS Report R46301, Title IV Provisions of the CARES Act (P.L. 116-136); and in CRS Insight IN11341, SBA's Paycheck Protection Program (PPP) Loans and Self-Employed Individuals. In addition, the Federal Reserve has taken steps to provide liquidity to financial markets, examined in CRS Insight IN11327, Federal Reserve: Emergency Lending in Response to COVID-19.

Assisting Affected Consumers

Regulators' efforts to deal with the potential effects of COVID-19 began in early March with attempts to ensure that depository institutions were adequately planning for the potential risks. On March 6, 2020, the Federal Financial Institutions Examination Council (FFIEC) updated its influenza pandemic guidance to minimize the potentially adverse effects of COVID-19. The guidance identifies business continuity plans as a key tool to address pandemics and provides a comprehensive framework to ensure the continuation of critical operations.

In the past month, regulators have shifted focus to providing guidance on how to address and serve customers affected by the virus. (For more on policy options for financial services companies responding to customers affected by COVID-19, see CRS Insight IN11244, COVID-19: The Financial Industry and Consumers Struggling to Pay Bills.)

Regulatory Adjustments

Banks are subject to "safety and soundness" regulations, which include rules related to banks' capital and liquidity. Bank regulators also have the authority to supervise banks, which includes examinations and off-site monitoring. In response to COVID-19, bank regulators have made certain adjustments to banking regulation and supervision. In the following announcements and rulemakings, the regulators cited COVID-19 as a motivating factor.

March 17, 2020: Bank regulators released a statement encouraging banks to use their capital and liquidity buffers to support continued lending. On March 19, the agencies released a clarification on the statement that included a Q&A document. These guidance documents remind banks that the purpose of the buffers is to ensure banks can keep lending during distressed times and encourage banks to continue lending prudently. On the same day, the Federal Reserve issued a statement encouraging banks that need liquidity to borrow from its discount window.

March 20: Bank regulators issued a rule change on how capital is measured to make it easier for banks to comply with capital rules that can place restrictions on a bank's dividend payments and other capital distributions. On March 23, the Federal Reserve announced the new definition would also be applied to the total loss-absorbing capacity rules applied to the largest U.S. banks and U.S. operations of foreign banks. The rules require those banks to hold certain types and amounts of capital and debt.