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Editorial note: This Advisory was updated May 15, 2020.

The unprecedented economic dislocation caused by the COVID-19 pandemic has prompted comprehensive legislative and administrative responses. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act or Act), signed into law on March 27, 2020, is the largest single piece of recovery legislation in US history. It is the third piece of federal legislation enacted in response to the COVID-19 crisis. Since then, a fourth bill has been passed to provide additional funding and relief, and still more legislation is in the works. Simultaneously, federal banking and financial services regulatory agencies—in part guided by their experience during the 2008 economic crisis—have developed their own programs to provide systemic liquidity and relief to hard-hit businesses and consumers. In addition, state agencies have moved to implement economic relief at the state level.

Unlike many industries that are largely shut down or sharply curtailed due to the pandemic, the financial services sector is generally seen by policymakers as a critical component of the solution. Many of the CARES Act's primary avenues for assistance to the business community are through loan and loan guarantee programs that rely on financial institutions to extend the credit and provide the liquidity needed by affected businesses. Loan programs such as the $500 billion Treasury Department loan/guarantee/investment program make up a substantial portion of the CARES Act. The CARES Act also provides financial regulators greater flexibility to address the crisis, even as the Board of Governors of the Federal Reserve System (Federal Reserve) had begun expanding its efforts, in the form of a wave of financing facilities, even before the legislation was enacted.

This Advisory discusses these two primary categories of financial- and market-related support and regulatory relief provided in response to the COVID-19 crisis: 1) statutory support and relief provided under the CARES Act, and 2) the establishment of lending and liquidity facilities and various support actions taken independently by federal regulatory agencies, as well as actions taken by certain state governments.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.