In wake of deadly/devastating CA wildfires, regulators vow assistance to institutions

Federal and state financial institution regulators teamed up Thursday to offer regulatory assistance to financial institutions affected by the wildfires in California that have killed scores of people, left hundreds unaccounted for, and made thousands homeless (as more than an estimated 15,000 houses have been destroyed by the conflagration).

All three federal banking agencies plus the National Credit Union Administration (NCUA), the Conference of State Bank Supervisors (CSBS representing state regulators nationwide), and local financial institution regulator California Department of Business Oversight (DBO) signed on to the joint statement. They said their agencies would provide appropriate regulatory assistance to affected institutions subject to their supervision.

“The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities,” the agencies wrote.

The joint statement listed six areas of guidance to both financial institutions and examiners in responding to the disaster:

Lending: Financial institutions should work constructively with borrowers in communities affected by the wildfires. Prudent efforts to adjust or alter terms on existing loans in affected areas should not be subject to examiner criticism. Modifications of existing loans should be evaluated individually to determine whether they represent troubled debt restructurings.

Temporary facilities: Where operational challenges persist, the primary federal and/or state regulator will expedite, as appropriate, any request to operate temporary facilities to provide more convenient availability of services to those affected by the wildfires. In most cases, a telephone notice to the primary federal and/or state regulator will suffice initially to start the approval process, with necessary written notification being submitted shortly thereafter.

Publishing: Institutions experiencing disaster-related difficulties in complying with any publishing or other requirements should contact their primary federal and/or state regulator.

Regulatory reporting: 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 the wildfires.

Community Reinvestment Act (CRA): Financial institutions (as applicable) 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. (For additional information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment at https://www.ffiec.gov/cra/qnadoc.htm.)

Investments:Institutions should monitor municipal securities and loans affected by the wildfires. Appropriate monitoring and prudent efforts to stabilize such investments are encouraged.

Federal and state financial regulatory agencies issue interagency statement on supervisory practices regarding financial institutions and their customers affected by California wildfires

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