Damage from mudslides, landslides and flooding caused by severe winter storms in California, and destruction from straight-line winds and tornadoes in Alabama caused by violent storms there – both this month – have prompted the federal bank deposit insurance agency to provide regulatory relief to banks in areas of those states affected by the storms.
The Federal Deposit Insurance Corp. (FDIC) announced the relief Wednesday. In separate financial institution letters (FILs) the agency said:
- The Federal Emergency Management Agency (FEMA) declared a federal disaster for selected areas affected in California on Jan. 14, 2023, and for selected areas affected in Alabama on Jan. 15, 2023. The agency said FEMA may make additional designations after damage assessments are completed in the affected areas.
- The FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused (in Alabama) by severe storms, straight-line winds and tornadoes, and (in California) by severe winter storms, flooding, landslides, and mudslides.
- Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices can contribute to the health of the local community and serve the long-term interests of the lending institution.
- Banks may receive favorable Community Reinvestment Act (CRA) consideration for community development loans, investments, and services in support of disaster recovery.
- The FDIC also will consider regulatory relief from certain filing and publishing requirements.