Agencies Offer Regulatory Assistance in Disaster Affected Areas

Bradley Arant Boult Cummings LLP

On the first day of National Preparedness Month, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Conference of State Bank Supervisors issued a joint statement recognizing the impact of Hurricane Laura and the California wildfires on the operations of financial institutions.

Through the joint statement, the agencies announced they will provide the following regulatory assistance:

  • Lending: The agencies advised that actions taken to alter the terms of existing loans in affected areas “should not be subject to examiner criticism” and that they “will consider the unusual circumstances these institutions face” in supervising any institutions that are affected by these disasters. The agencies recommended that modifications of existing loans should be evaluated individually, considering the circumstances of each borrower and loan, to determine whether such modifications would constitute troubled debt restructurings.
  • Temporary Facilities: Where regulated institutions face challenges in re-opening facilities after Hurricane Laura and the California wildfires, the agencies “will expedite, as appropriate, any request to operate temporary facilities to provide more convenient availability of services to those affected by these disasters.” Affected institutions may begin the approval process for temporary facilities through a phone call to their primary regulator.
  • Publishing Requirements: Because damage caused by Hurricane Laura and the California wildfires may affect compliance with notice requirements for branch closings, relocations, and temporary facilities, regulated institutions should contact their primary regulator if they experience difficulties in complying with publishing or notice requirements.
  • Regulatory Reporting Requirements: Any regulated institution that anticipates difficulty in complying with reporting requirements should contact the institution’s primary regulator to discuss. The agencies advised that they “do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with the agencies’ regulatory reporting requirements if those institutions are unable to fully satisfy those requirements because of these disasters.”
  • Community Reinvestment Act (CRA): Financial institutions may receive CRA consideration for community development loans, investments, or services that revitalize or stabilize a federally designated disaster area.

National Preparedness Month is recognized each September to promote the importance of disaster planning. The theme for September 2020 is “Disasters Don’t Wait. Make Your Plan Today.” Through its website ready.gov, the Federal Emergency Management System provides a number of resources for families and communities, including suggested weekly activities. For example, Week 1 is “Make a Plan,” which encourages friends and family to determine how they will communicate before, during, and after a disaster considering the specific needs of their household.

Over the next several weeks, we will provide additional information about National Preparedness Month and steps financial institutions can take to make their own plan that addresses customer needs and regulatory requirements during disasters.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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