On March 13, 2020, the OCC and FDIC released effectively identical statements encouraging the financial institutions that they supervise to prudently work with adversely affected customers, including consumers and businesses.1 This mirrors guidance issued on March 10, 2020 by the New York Department of Financial Services (“NYDFS”).2
The statements from the federal regulators encourage banks to take steps to meet the financial services needs of customers adversely affected by COVID-19-related issues. Potential accommodations include:
- Waiving certain fees, such as:
- Increasing ATM daily cash withdrawal limits;
- Easing restrictions on cashing out-of-state and non-customer checks;
- Increasing credit card limits for creditworthy borrowers;
- Offering payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting; and
- Working with customers who are temporarily unable to work due to temporary business closures, slowdowns, or sickness.
a. Automated teller machine (“ATM”) fees for customers and non-customers,
b. Overdraft fees,
c. Late payment fees on credit cards and other loans, and
d. Early withdrawal penalties on time deposits;
The statements recognize there may be other accommodations that could assist customers and communities in responding to challenges from COVID-19, and indicate that the regulators support and will not criticize efforts to accommodate customers in a safe and sound manner. However, the statements indicate that modifications should be based on the facts and circumstances of each borrower and loan, which leaves open the question of whether regulators will approve blanket accommodation programs (e.g., suspending interest charges for all borrowers in a particular state) that do not require customers to request relief.3
The statements also indicate that the regulators will work with institutions on examination, regulatory reporting, and facility availability issues.
Similar to the federal guidance, NYDFS issued guidance encouraging New York regulated banks, credit unions and licensed lenders to consider all reasonable and prudent steps to assist businesses that have been adversely impacted by COVID-19, including:
- Offering payment accommodations, such as allowing loan borrowers to defer payments, extending the payment due dates or otherwise adjusting or altering terms of existing loans, which would avoid delinquencies and negative credit agency reporting;
- Waiving overdraft fees;
- Easing credit terms for new loans;
- Waiving late fees for loan balances; and
- Proactively reaching out to customers and those adversely impacted via app announcements, text, email or otherwise to explain the above-listed and any other assistance being offered to them.
It is a virtual certainty that the regulators will issue further guidance on providing customer relief in response to COVID-19, and in fact, some guidance was issued immediately after publication of the initial statements. In addition to ambiguities in the existing guidance, the duration of the COVID-19 crisis is likely to exceed initial expectations. Continual collaboration between industry and regulators will be necessary to develop solutions and support the economy.
1 OCC, Bull. No. 2020-15 (Mar. 13, 2020), https://occ.gov/news-issuances/bulletins/2020/bulletin-2020-15.html; FDIC, FIL-17-2020 (Mar. 13, 2020), https://www.fdic.gov/news/news/financial/2020/fil20017.html.
2 NYDFS, Ltr. Regarding Support for Businesses Impacted by the Novel Coronavirus (Mar. 10, 2020), https://dfs.ny.gov/industry_guidance/industry_letters/il20200310_support_businesses. The Governor of New York and NYDFS subsequently released mandatory customer accommodation requirements that are covered in our related blog post: New York DFS Issues Emergency Regulation to Provide Financial Relief to Residential Mortgage Borrowers.
3 The initial statements from federal regulators mentioned the issue of how customer accommodations and modified loans are treated under the accounting standards and regulatory reporting requirements. The federal regulators issued further guidance on the accounting implications of providing customer accommodations that we will address in a subsequent Legal Update. See FDIC, FIL-18-2020 (Mar. 19, 2020), https://www.fdic.gov/news/news/financial/2020/fil20018.html; Interagency, FIL-22-2020 (Mar. 22, 2020), https://www.fdic.gov/news/news/financial/2020/fil20022.html; FDIC, FDIC Chairman Urges FASB to Delay Certain Accounting Rules Amid Pandemic (Mar. 19, 2020), https://www.fdic.gov/news/news/press/2020/pr20036.html.