On the regulatory side, the Fed has taken a number of steps to encourage banks to use their balance sheet to support borrowers. For community banks, for example, the federal banking agencies are implementing the part of the CARES Act to lower the community bank leverage ratio.3 4 In terms of liquidity provision, the Fed has actively encouraged banks to use the discount window to help meet the demand for credit from household and businesses.5 To make this more attractive, the Fed has lowered the borrowing rate, extended the term of these loans, and actively signaled support for discount window use. The Fed also implemented the Paycheck Protection Program Liquidity Facility (PPPLF).6 This facility is designed to support the effectiveness of the Paycheck Protection Program, created by the CARES Act and implemented by the Small Business Administration (SBA), by extending credit to financial institutions that make PPP loans. Supplying financial institutions with additional liquidity will help increase their capacity to make PPP loans. In term of eligibility for participation in the PPPLF, the Federal Reserve is working to expand eligibility to PPP lenders that are not depository institutions in the near future.7 Consumer Protection https://www.newyorkfed.org/newsevents/speeches/2020/sti200424  1/2  Panel Remarks: The Fed and Main Street during the Coronavirus Pandemic - FEDERAL RESERVE BANK of NEW YORK  The Fed has emphasized the importance of consumer protection during this period.

Provision of Financial Services Broadly speaking, the fundamental purpose of banking is to provide financial services such as credit provision, payments, and deposit-taking to support sustained economic growth. This is true in normal times, and is even more true in the current environment. The Fed has taken a number of actions to help the U.S. banking sector perform these critical functions through changes to supervision, regulation and the provision of liquidity. Collectively, these steps are designed to limit the potential for financial channels to amplify the initial economic shock created by the COVID-19 virus. Beginning with supervision, the federal banking agencies, in consultation with state financial regulators, are encouraging financial institutions to work with borrowers in a safe and sound manner.1 The agencies view prudent loan modification programs as positive and proactive actions that can help both borrowers and lenders. This approach is consistent with the agencies' longstanding practice of encouraging financial institutions to assist borrowers in times of natural disaster and other extreme events. The Fed has also provided information to banks on how we are adjusting our supervisory approach.2 This includes, for example, monitoring and outreach to help banks of all sizes understand current challenges and risks; a temporary reduction in exam activities, particularly for the smallest and lowest risk institutions; and additional time to resolve non-critical existing supervisory findings. These actions should help financial institutions deploy their resources as efficiently as possible and continue to support their customers and local economies in a prudent and fair manner.