Bowman says as exams resume, Fed’s initial focus is on higher-risk banks

The community banking representative on the Federal Reserve Board told a conference of Kansas bankers Wednesday that she plans to speak with each of the 650 community banks the Fed supervises and, later in her remarks, said the Fed will remain mindful of the challenges banks continue to face amid the coronavirus (COVID-19) pandemic as it resumes examinations.

Federal Reserve Board Gov. Michelle Bowman, speaking before a Kansas Bankers Association conference in Topeka, on Wednesday reviewed the financial and economic impacts of the pandemic – nationally and within the state of Kansas – and the Fed’s and other regulators’ efforts to help mitigate those. One of those steps in late March was a pause by the Fed in examinations for most small banks, she noted, adding that the Fed also took steps to lengthen remediation timeframes for outstanding issues.

“We considered the exam pause an important step to provide bankers time to adjust operations to protect the health of customers and employees, to prioritize the financial needs of their customers and communities, and to play an essential and vital role in implementing critical relief programs like the PPP [Paycheck Protection Program],” she said.

As the Fed resumes examinations (as it announced it would June 15), Bowman said the central bank’s initial focus will be to assess higher-risk banks, “particularly those with credit concentrations in higher risk or stressed industries.” She added that the Fed “will continue to be sensitive to the capacity of each bank to participate in examinations and strive to prevent undue burden on banks struggling with crisis-related operational challenges.”

The Pandemic’s Effect on the Economy and Banking” – speech by Fed Gov. Michelle W. Bowman at the Kansas Bankers Association CEO and Senior Management Forum/Annual Meeting, Topeka, Kansas (via webcast)