Regulators extend Hurricane Idalia support to affected institutions

A table is covered in debris and tree branches after Hurricane Idalia made landfall in Horseshoe Beach, Florida, on Wednesday. Hurricane Idalia has knocked out power to hundreds of thousands of customers, grounded more than 800 flights and unleashed floods along Florida’s coast far from where it came ashore as a Category 3 storm earlier today.

Christian Monterrosa/Bloomberg

WASHINGTON — Federal and state regulators said Friday they won’t punish banks and credit unions for compliance shortfalls in the recovery period after Hurricane Idalia.

Regulators also told financial institutions to monitor vulnerable investments, saying they would expedite applications for temporary facilities, and also encouraged lenders to meet impacted communities’ needs including being more flexible with local borrowers. 

“Institutions should individually evaluate modifications of existing loans to determine whether they represent troubled debt restructurings or modifications to borrowers experiencing financial difficulty, as applicable,” the release noted. “The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest.”

The agencies’ disaster guidance comes as part of an interagency statement issued jointly by the The Federal Deposit Insurance Corp., the Federal Reserve Board, the National Credit Union Administration, the Office of the Comptroller of the Currency and state financial regulators. 

Regulators also said they would expedite banks’ requests to operate out of temporary facilities. While the process normally requires a written letter, the agencies said firms can begin the process with as little as a phone call to their primary regulator. 

The agencies also addressed the potential problems that impacted banks could have keeping in full compliance with publishing or regulatory reporting requirements related to the disaster. The statement advised banks to contact their primary regulator to report and receive guidance on any compliance shortfalls. The agencies say they likely will not penalize firms who take reasonable and prudent steps to comply and who keep their supervisors apprised of their situations.

At a time when many communities are facing hardship, the agencies also reminded institutions they may receive CRA credit for helping to meet local needs.

“Financial institutions may receive CRA 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,” the statement noted. 

The joint statement also encourages banks to take reasonable steps to monitor and stabilize assets vulnerable in the wake of Hurricane Idalia such as municipal securities and loans.

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