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9837

Rules and Regulations
Federal Register Vol. 86, No. 30
Wednesday, February 17, 2021

This section of the FEDERAL REGISTER
contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.

FEDERAL RESERVE SYSTEM
12 CFR Part 215
Regulation O; Docket No. R1740
RIN 7100AG 10

Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks Board of Governors of the Federal Reserve System Board.
ACTION: Interim final rule with request for comment.
AGENCY:

On April 17 and July 15, 2020, the Board issued two interim final rules to except certain loans made through June 30 and August 8, 2020, respectively, that are guaranteed under the Small Business Administrations Paycheck Protection Program from the requirements of section 22h of the Federal Reserve Act and the Boards Regulation O. The Board is issuing this interim final rule to further extend this relief to PPP loans, including PPP
second draw loans, made through March 31, 2021.
DATES: This interim final rule is effective February 17, 2021. Comments on the interim final rule must be received no later than April 5, 2021.
ADDRESSES: You may submit comments, identified by Docket No. R1740 and RIN 7100 AG 10, by any of the following methods:
Agency Website: http
www.federalreserve.gov. Follow the instructions for submitting comments at https www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
Email: regs.comments@
federalreserve.gov. Include docket and RIN numbers in the subject line of the message.
Fax: 202 4523819 or 202 452
3102.
Mail: Ann E. Misback, Secretary, Board of Governors of the Federal Reserve System, 20th Street and
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SUMMARY:

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Constitution Avenue NW, Washington, DC 20551.
All public comments will be made available on the Boards website at http www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons or to remove personally identifiable information at the commenters request. Accordingly, comments will not be edited to remove any identifying or contact information.
Public comments also may be viewed electronically or in paper form in Room 146, 1709 New York Avenue NW, Washington, DC 20006, between 9:00
a.m. and 5:00 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT:
Benjamin McDonough, Associate General Counsel, 202 4522036, Alison Thro, Deputy Associate General Counsel, 202 4523236, Dan Hickman, Senior Counsel, 202 9737432, Josh Strazanac, Senior Attorney, 202 452
2457, Jasmin Keskinen, Attorney, 202
4756650, Legal Division; or Anna Lee Hewko, Associate Director, 202 530
6360, Juan Climent, Assistant Director, 202 8727526, 202 4525239, Kathryn Ballintine, Manager, 202 452
2555, Rebecca Zak, Lead Financial Institution Policy Analyst, 202 912
7995, Eusebius Luk, Senior Financial Policy Analyst I, 202 4522874, Division of Supervision and Regulation;
Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW, Washington, DC 20551. Users of Telecommunication Device for Deaf TDD only, call 202
2634869.
SUPPLEMENTARY INFORMATION:
Table of Contents I. Background II. The Interim Final Rule III. Administrative Law Matters A. Administrative Procedure Act B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Riegle Community Development and Regulatory Improvement Act of 1994
E. Use of Plain Language
I. Background On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security CARES
Act which, among other things, created the Paycheck Protection Program PPP
to facilitate lending to small businesses affected by the outbreak of COVID19
and imposition of associated
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containment measures COVID event.
Although the CARES Act specified that the PPP would end on June 30, 2020, it was later extended to August 8, 2020.1
On December 27, 2020, the President signed into law the Consolidated Appropriations Act, 2021
Appropriations Act, which further extended the PPP to March 31, 2021.2
The Appropriations Act also created PPP second draw loans, which are substantially similar to the PPP loans that have been made to date.3
Regulation O sets forth quantitative and qualitative requirements for loans made by a bank 4 to its directors, executive officers, and principal shareholders, as well as to any companies owned by such persons collectively, insiders.5 Regulation O
also sets forth procedural and recordkeeping requirements for loans by banks to their insiders. These requirements normally would apply to PPP loans made by banks to the small businesses owned by their insiders. In some cases, the restrictions in Regulation O could delay or entirely prohibit a bank from making a PPP loan to such a business. This could be particularly challenging in small communities where bank insiders often own small businesses and there are few alternative lenders.
On April 17, 2020, the Board issued an exception to section 22h of the Federal Reserve Act 6 and the corresponding provisions of Regulation O for PPP loans made to insiders that would not be prohibited from receiving a PPP loan under the Small Business Administration SBA lending 1 Prioritized Paycheck Protection Program Act, S.
4116, 116th Cong. section 1 2020.
2 Consolidated Appropriations Act, 2021, H.R.
133, 116th Cong. section 323 2020.
3 Consolidated Appropriations Act, 2021, H.R.
133, 116th Cong. section 311.
4 Sections 22g and 22h, and Regulation O, apply to all banks that are members of the Federal Reserve System. Other federal law subjects federally insured state non-member banks and insured savings associations to sections 22g and 22h in the same manner and to the same extent as if they were member banks. 12 U.S.C. 1828j non-member banks; 12 U.S.C. 1468b savings associations; 12
CFR 337.3 state non-member banks and state savings associations; 12 CFR 31.2 national banks and federal savings associations. Accordingly, any reference to bank in this notice applies to all member banks and institutions subject to sections 22g and 22h in the same manner and to the same extent as member banks.
5 See generally 12 CFR part 215.
6 12 U.S.C. 375b.

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