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Financial Institution Letters


Supervisory Practices Regarding Depository Institutions and Borrowers Affected by Earthquake Damage in California

The Federal Deposit Insurance Corporation (FDIC) recognizes the serious impact of the recent earthquakes in California on the operations of financial institutions and will provide regulatory assistance to institutions subject to its supervision. The FDIC encourages depository institutions in the affected disaster areas to meet the financial service needs of their communities.

Lending. Bankers should work constructively with borrowers in communities affected by the major earthquakes. The FDIC realizes that the effects of such disasters on local businesses and individuals are often transitory, and that prudent efforts to adjust or alter terms on existing loans in areas affected by the earthquakes should not be subject to examiner criticism. In supervising institutions impacted by the earthquakes, the FDIC will take into consideration the unusual circumstances they face. The agency recognizes that efforts to work with borrowers in communities under stress can be consistent with safe and sound banking practices as well as in the public interest.

Reporting Requirements. FDIC-supervised institutions affected by the earthquakes should notify the San Francisco Regional Office at (415) 808-8019 if they expect a delay in filing their Reports of Income and Condition (Call Reports) or other reports. The FDIC will take into consideration any causes beyond the control of a reporting institution in considering how long of a filing delay will be acceptable.

Publishing Requirements. The FDIC understands that the damage caused by the major earthquakes may affect compliance with publishing and other requirements for branch closings, relocations and temporary facilities under various laws and regulations. Banks that have disaster-related difficulties in complying with any publishing or other requirements should contact the San Francisco Regional Office.

Consumer Laws. Regarding consumer loans, Regulation Z provides consumers an option to waive or modify the three-day rescission period when a "bona fide personal financial emergency" exists. To exercise this option, the consumer must provide the lender with a statement describing the emergency in accordance with the regulation.

Temporary Banking Facilities. The San Francisco Regional Office will expedite any request to operate temporary bank facilities by an institution whose offices have been damaged or that desires to provide more convenient availability of services to those affected by the earthquakes. In most cases, a telephone notice to the regional office will suffice initially, and necessary written notification can be submitted later.



Last Updated 12/31/2003 communications@fdic.gov