- August 11, 2023
- Posted by: legaleseblogger
- Category: Related News
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FDIC Takes Steps to Provide Regulatory Relief to Financial Institutions and Assist Wildfire Recovery in Hawaii
The Federal Deposit Insurance Corporation (FDIC) has recently announced a series of measures aimed at offering regulatory relief to financial institutions and facilitating the recovery efforts in areas of Hawaii impacted by wildfires. These initiatives are designed to alleviate the regulatory burden on supervised institutions and support their ability to serve their communities amidst the challenges posed by natural disasters.
Statement of Applicability
The information contained in this Financial Institution Letter (FIL) applies to all FDIC-supervised financial institutions.
FIL-41-2023 | August 11, 2023
Supervisory Practices Regarding Depository Institutions and Borrowers Affected by Wildfires in Hawaii
The FDIC acknowledges the significant impact of wildfires on both customers and the operations of financial institutions in Hawaii. Consequently, the FDIC is committed to providing regulatory assistance to supervised institutions in these affected areas. The primary objectives of these relief measures are to ease regulatory burdens and facilitate the recovery process. Additionally, the FDIC strongly encourages depository institutions operating in the affected zones to prioritize meeting the financial services needs of their communities.
The specific area in Hawaii currently affected by the wildfires is Maui County.
Lending
The FDIC urges bankers to collaborate constructively with borrowers residing in communities affected by the wildfires. Recognizing that the consequences of natural disasters on local businesses and individuals are often temporary, the FDIC emphasizes that prudent efforts to adjust or modify terms of existing loans in these impacted areas should not be subject to examiner criticism. When assessing institutions affected by wildfires, regulatory examiners will take into consideration the unique challenges faced by these banks. The FDIC acknowledges that efforts to work with borrowers in stressed communities align with safe-and-sound banking practices and serve the public interest.1
Community Reinvestment Act (CRA)
Financial institutions engaged in community development activities that revitalize or stabilize federally designated disaster areas within their assessment areas or the surrounding regions may be eligible for consideration under the CRA. For more detailed information, institutions are advised to refer to the Interagency Questions and Answers Regarding Community Reinvestment, Section 12(g)(4)(ii). In case financial institutions require assistance in identifying suitable community development activities to revitalize or stabilize the disaster area, they can reach out to their regional Community Affairs Officer.
Investments
Bankers are strongly encouraged to closely monitor municipal securities and loans that have been affected by the wildfires. Given that local government projects may experience negative effects, the FDIC advises bankers to engage in appropriate monitoring measures and adopt prudent efforts to stabilize such investments.
Reporting Requirements
Institutions under the FDIC’s supervision that have been impacted by wildfires should promptly notify the San Francisco Regional Office in the event of anticipated delays in filing Reports of Income and Condition or other required reports. The FDIC will take into account any causes beyond the control of the reporting institutions when evaluating the acceptability of the delay’s duration.
Publishing Requirements
The FDIC recognizes that the damages caused by wildfires may impede compliance with publishing and other requirements related to branch closings, relocations, and temporary facilities as stipulated by applicable laws and regulations. Consequently, banks encountering difficulties in fulfilling any publishing or other obligations due to the disaster are advised to get in touch with the San Francisco Regional Office for appropriate assistance.
Consumer Laws
Regulation Z provides an option to consumers with principal dwelling-secured loans to waive or modify the three-day rescission period if they are facing a “bona fide personal financial emergency.” To avail themselves of this option, consumers must furnish the lender with a statement detailing the emergency in accordance with the regulation.
Temporary Banking Facilities
Institutions that have suffered damage to their offices or wish to enhance the availability of services for the wildfire-affected population and subsequently require temporary banking facilities can expedite their requests by contacting the San Francisco Regional Office. Initially, a telephone notice to the FDIC will suffice, with the necessary written notification to be submitted at a later stage.
1 Institutions should individually assess and determine whether modifications of existing loans, reported in accordance with Accounting Standards Codification (ASC) Subtopic 310-40, Receivables ÔÇö Troubled Debt Restructurings by Creditors, qualify as troubled debt restructurings. For institutions that have adopted ASC Topic 326, Financial Instruments ÔÇö Credit Losses, and Accounting Standards Update (ASU) 2022-02, Troubled Debt Restructurings and Vintage Disclosures, modifications of existing loans should be evaluated individually to ascertain whether they represent modifications to borrowers experiencing financial difficulties. The evaluation should be based on the specific circumstances and facts related to each borrower and modification.1
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