Recognizing “the serious impact of Hurricane Harvey on the customers and operations of many financial institutions,” Federal and state bank regulators have issued guidance for institutions in Texas.
A statement from the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and state bank regulators this week says they “will provide regulatory assistance to affected institutions subject to their supervision.” The agencies encourage institutions in the affected areas “to meet the financial services needs of their communities.”
A complete list of the affected disaster areas can be found at www.fema.gov.
Regarding lending, the advisory says “bankers should work constructively with borrowers in communities affected by Hurricane Harvey.”
“The agencies realize that the effects of natural disasters on local businesses and individuals are often transitory, and prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism,” the agencies wrote. “In supervising institutions affected by the hurricane, the agencies will consider the unusual circumstances they face.”
The agencies said they recognize that efforts to work with borrowers in communities under stress “can be consistent with safe-and-sound banking practices as well as in the public interest.”
Financial institutions were told that may receive Community Reinvestment Act consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas in their assessment areas or in the states or regions that include their assessment areas. For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment.
Regarding investments: Bankers should monitor municipal securities and loans affected by the hurricane. “The agencies realize local government projects may be negatively affected,” the advisory says. “Appropriate monitoring and prudent efforts to stabilize such investments are encouraged.”
Institutions affected by Hurricane Harvey that expect to encounter difficulty meeting the agencies' reporting requirements are instructed to contact their primary federal regulatory agency to discuss their situation.
“The agencies 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 the effects of Hurricane Harvey,” the advisory says. “The agencies' staffs stand ready to work with affected institutions that may be experiencing problems fulfilling their reporting responsibilities, taking into account each institution's particular circumstances, including the status of its reporting and recordkeeping systems and the condition of its underlying financial records.”
The regulators added that they “understand that the damage caused by the hurricane may affect compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations.” Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal regulatory agency.
Many banks are facing power, telecommunications, staffing and other challenges in re-opening facilities after the hurricane. In cases in which operational challenges persist, the appropriate primary federal regulator will expedite any request to operate temporary banking facilities to provide more convenient availability of services to those affected by the hurricane. “In most cases, a telephone notice to the primary federal regulator will suffice initially,” the joint-guidance for banks says. “Necessary written notification can be submitted later.”