AI Legalese Decoder: Empowering Financial Institutions for Effortless Recovery in Flood-Stricken Areas of Alaska
- August 28, 2023
- Posted by: legaleseblogger
- Category: Related News
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The FDIC Announces Regulatory Relief Measures for Financial Institutions and Flooding Recovery in Alaska
The Federal Deposit Insurance Corporation (FDIC) has recently announced a range of measures aimed at providing regulatory relief to financial institutions and facilitating recovery in areas of Alaska affected by flooding. These initiatives are designed to alleviate the challenges faced by both the institutions themselves and the communities they serve.
Statement of Applicability
The contents of, and material referenced in, this FDIC Information Letter (FIL) apply to all FDIC-supervised financial institutions.
August 28, 2023 | FIL-44-2023
Supervisory Practices Regarding Depository Institutions and Borrowers Affected by Flooding in Alaska
The FDIC recognizes the serious impact of flooding on the customers and operations of financial institutions in the affected areas of Alaska. Therefore, the FDIC will provide regulatory assistance to institutions under its supervision. These measures aim to offer regulatory relief and facilitate the recovery process. The FDIC strongly encourages depository institutions in the affected areas to meet the financial service needs of their communities.
The areas affected by flooding in Alaska include Copper River Regional Educational Attendance Area (REAA), Kuspuk REAA, Lower Kuskokwim REAA, Lower Yukon REAA, and Yukon Flats REAA.
Lending
The FDIC urges bankers to work constructively with borrowers in communities affected by the flooding. Recognizing that the effects of natural disasters on local businesses and individuals are often temporary, the FDIC acknowledges that adjusting or altering terms on existing loans in affected areas should not be subject to examiner criticism. When supervising institutions affected by flooding, the FDIC will take into account the unique circumstances they face. The FDIC recognizes that efforts to work with borrowers in stressed communities align with safe-and-sound banking practices and serve the public interest. 1
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Community Reinvestment Act (CRA)
Financial institutions may receive Community Reinvestment Act (CRA) consideration for community development loans, investments, or services that revitalize or stabilize federally designated disaster areas within their assessment areas or in the states or regions that include their assessment areas. For more information, institutions should review the Interagency Questions and Answers Regarding Community Reinvestment at Section 12(g)(4)(ii). Financial institutions can also seek assistance from their regional Community Affairs Officer to identify community development activities aimed at revitalizing or stabilizing a disaster area.
Investments
Bankers are encouraged to closely monitor municipal securities and loans affected by the flooding. The FDIC recognizes that local government projects may be negatively impacted and urges bankers to engage in appropriate monitoring and take prudent measures to stabilize such investments.
Reporting Requirements
If an FDIC-supervised institution affected by the flooding anticipates a delay in filing Reports of Income and Condition or other reports, they should notify the San Francisco Regional Office. The FDIC will take into consideration any causes beyond the control of the reporting institution when assessing the acceptability of the delay.
Publishing Requirements
The FDIC understands that the damage caused by flooding may impede compliance with publishing and other requirements for branch closings, relocations, and temporary facilities under various laws and regulations. Banks experiencing difficulties related to the disaster in meeting publishing or other requirements should contact the San Francisco Regional Office for assistance.
Consumer Laws
For consumers’ loans secured by their principal dwelling, Regulation Z offers the option to waive or modify the three-day rescission period in the presence of a “bona fide personal financial emergency.” To exercise this option, the consumer must provide the lender with a statement describing the emergency in accordance with the regulation.
Temporary Banking Facilities
Institutions whose offices have been damaged or desire to offer more convenient availability of services to those affected by flooding can request to operate temporary banking facilities. The San Francisco Regional Office will expedite the processing of such requests. Initially, a telephone notice to the FDIC will suffice, and the necessary written notification can be submitted later, if required.
1 Institutions that report modifications of existing loans in accordance with Accounting Standards Codification (ASC) Subtopic 310-40, Receivables ÔÇô Troubled Debt Restructurings by Creditors, should evaluate those modifications individually to determine whether they represent troubled debt restructurings. For institutions that have adopted ASC Topic 326, Financial Instruments ÔÇô Credit Losses, and Accounting Standards Update (ASU) 2022-02, Troubled Debt Restructurings and Vintage Disclosures, modifications of existing loans should be evaluated individually to determine whether the modification to a borrower experiencing financial difficulty. Under both ASC Topic 326 and ASU 2022-02, this evaluation should be based on the facts and circumstances of each borrower and modification.
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