As is a tradition when Mother Nature’s fury strikes, banks are being reminded of the best practices that accompany natural disasters and other emergency conditions.
On Oct. 5, the Office of the Comptroller of the Currency issued a proclamation allowing national banks and federal savings associations affected by Hurricane Matthew to close at their discretion. The agency expects that only those bank offices directly affected by the extreme weather will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.
The agency also reminded bankers of OCC Bulletin 2012-28, “Supervisory Guidance on Natural Disasters and Other Emergency Conditions,” guidance on actions they should consider implementing when their institution operates or has customers in areas affected by a severe calamity.
The Comptroller of the Currency, or an appointed designee, has the authority to declare a legal holiday for banks in the event of natural calamity, riot, insurrection, war, or other emergency conditions. Regardless of whether a legal holiday has been declared through a written proclamation, “bank management has the discretion in the case of any emergency or event, to act prudently and responsibly to ensure the safety of human life and to safeguard banking assets (tangible and intangible).”
If an event is expected to result in long-term or widespread disruption of critical services, and banks operate or have customers in areas that are affected by the event, the OCC encourages management to consider: waiving or reducing ATM fees; temporarily waiving late payment fees or penalties for early withdrawal of savings for affected customers; working with borrowers affected by the event to restructure debt obligations, including, as apporopriate, altering or adjusting payment terms; expediting lending decisions when possible; and reassessing the current credit needs of the community and helping meet those needs by originating or participating in sound loans to rebuild damaged property.
“Examiners will not criticize these types of responses as long as the actions are taken in a manner consistent with sound banking practices,” the guidance says. “The OCC recognizes adjusting or modifying payment terms may be the most reasonable option for some borrowers when done prudently, and documentation deficiencies may occur because of bank staffing shortages and business disruptions during a recovery period.”
During an emergency, the OCC may temporarily waive the Qualified Thrift Lender requirements for federal savings associations in order to help rebuild affected businesses. It may also consider a bank’s support of recovery-related activities in a disaster and help in revitalizing and stabilizing the affected area under provisions of the Community Reinvestment Act.
The OCC, as a member of the Financial and Banking Information Infrastructure Committee, can help expedite requests for assistance for critical issues such as cash availability or delivery and the restoration of telecommunication services. Additionally, the agency will also be ready to approve temporary facilities that may be needed to replace facilities damaged or destroyed as a result of an event.
A bank should promptly notify its supervisory office if it expects a delay in filing Reports of Condition and Income or other reports. The agency will evaluate any causes beyond the control of a reporting institution when considering the length of an acceptable delay.