WBA recently submitted comments to the federal banking agencies expressing support for changes made to regulatory capital rules. The interim rule impacts banks that participate in the Federal Reserve Banks’ Payment Protection Program Lending Facility (PPPLF).
Wisconsin’s banks have been leaders in offering PPP loans to their small business customers. Many of those banks, especially small community banks, need flexibility in liquidity options such as that offered by the PPPLF program.
To participate in the PPPLF program, banks must originate and hold PPP covered loans on their balance sheets. This could result in the bank being required to increase regulatory capital. This potential result could cause some banks to not use the lending facility. The changes made in the interim rule negate the possibility of increased capital requirements for participating banks. Regulatory capital requirements are treated the same for both PPPLF and the Money Market Mutual Fund Liquidity Facility (MMLF)