top of page

Regulators give banks capital relief for coronavirus-related business loans

Written by Jasir Jawaid

Federal banking agencies granted capital relief to institutions participating in the Paycheck Protection Program, issuing an interim final rule that neutralizes the regulatory capital effects of loans pledged to the facility on leverage and risk-based ratios.

The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said the rule applies a zero percent risk weight to loans covered by the PPP for capital purposes.

The rule is effective immediately, and comments will be accepted for 30 days.

The Fed and other agencies have recently made a number of deregulatory moves amid the worsening coronavirus pandemic, such as lowering the community bank leverage ratio until 2022 and cutting back on bank examinations, particularly for lenders with less than $100 billion in assets.

This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.


bottom of page