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PR-70-94 (10-28-94)

The Federal Deposit Insurance Corporation announced today a series of steps intended to facilitate the process of rebuilding the areas damaged by the recent flooding in Texas.

The FDIC is encouraging the state-chartered banks it supervises to work constructively with borrowers who are experiencing difficulties due to conditions beyond their control. Extending repayment terms, restructuring existing loans or easing terms for new loans, if done in a manner consistent with sound banking practices, can both contribute to the health of the community and serve the long-term interests of the lending institution.

Other aspects of the FDIC program provide specific regulatory relief. One is a temporary waiver of certain real estate appraisal regulations for the areas affected by the flooding. Another is temporary relief from certain capital requirements if an already adequately capitalized bank finds its asset levels increasing due solely to deposits of insurance proceeds or government assistance funds.

The FDIC's guidelines are attached and are being sent to state nonmember banks in Texas and to FDIC examiners.


The Federal Deposit Insurance Corporation recognizes the serious impact of the floods on the operations of financial institutions in Texas and will provide regulatory assistance to institutions subject to its supervision. These initiatives are being taken to provide regulatory relief and facilitate recovery. The FDIC encourages depository institutions in the affected disaster area to meet the financial service needs of their communities.

Lending. Bankers should work constructively with borrowers in communities affected by the recent flooding in Texas. The FDIC realizes that the effects of such natural 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 flooding should not be subject to examiner criticism. The FDIC in supervising institutions impacted by the disaster will take into consideration the unusual circumstances they face. The FDIC 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.

Waiver of Real Estate Appraisal Regulations. The Depository Institutions Disaster Relief Act of 1992 (A) provides the FDIC and the other federal financial regulatory agencies with the authority to grant certain regularity relief to financial institutions affected by major disasters. Pursuant to section 2 of DIDRA, the FDIC will issue within a few days a waiver of its real estate appraisal regulations for real estate related transactions involving property affected by the flooding.

Loan Documentation. The FDIC reminds lenders of its program on documentation of loans to small and medium-sized businesses and farms. If an institution has adequate capital and is rated 1 or 2, it may designate a basket of loans that examiners will evaluate solely on the basis of performance and will be exempt from criticism for documentation. The program also extends to certain 3-rated institutions.

Capital Requirements. Under section 3 of the Depository Relief Act of 1993, financial institutions may seek relief from regulations governing leverage capital requirements if they are experiencing a temporary increase of assets due to the influx of insurance proceeds or government assistance funds.

Reporting Requirements. FDIC-supervised institutions affected by the flooding should notify the Dallas Regional Office 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 a delay in filing can be accepted.

Publishing Requirements. The FDIC understands that the flooding may affect compliance with publishing and other requirements for branch closings, relocations and temporary facilities under various laws and regulations.

Consumer Laws. As regards 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.

For guidance on these and related matters, please contact the Dallas Regional Office of the FDIC's Division of Supervision at (214) 220-3342.

Last Updated 07/13/1999

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