Compliance Blog

Written By David Park, Regulatory Compliance Counsel, NAFCU

Hi everyone,

It has been a busy hurricane season this year in the Atlantic and Pacific with Hurricanes Florence, Michael and Olivia, just to name a few, and the hurricane season for those areas does not officially end until November 30th.  The NAFCU Compliance team wanted to take this opportunity to remind everyone in the compliance world about a recent interagency statement and how the statement may affect a credit union impacted by a recent hurricane or similar disaster.

Interagency Statement

In September, several federal and state regulatory agencies including the NCUA issued an Interagency Statement on Supervisory Practices Regarding Financial Institutions Affected by Hurricane Florence in which the agencies “encourage[d] institutions operating in the affected areas to meet the financial services needs of their communities.”  The statement advised credit unions and other financial institutions impacted by Hurricane Florence about the following issues:

• Lending.  The agencies encouraged financial institutions to work with borrowers affected by Hurricane Florence and to adjust existing loan terms when the facts and circumstances of a particular situation suggest that modification would be prudent.  The agencies acknowledged that supervisory agencies would have to consider the unusual circumstances and challenges posed by the storm and not criticize financial institutions for making prudent modifications when necessary.
• Temporary Facilities.  The agencies represented that the primary regulator for a particular financial institution would expedite requests to operate temporary facilities in the wake of the storm if an institution encountered difficulty in reopening its facilities after the storm.
• Publishing Requirements.  The agencies asked that financial institutions contact their primary regulator if they experienced trouble when attempting to comply with a publishing or other requirement related to branch closings, relocations or temporary facilities.
• Regulatory Reporting Requirements.  The agencies requested that financial institutions contact their primary regulator if the institutions expected to have difficulty satisfying their regulatory reporting requirements.  FinCEN issued notices requesting that financial institutions contact FinCEN and their functional regulator about any delays in filing BSA reports as a result of Hurricanes Florence and Michael.
• Investments.  The agencies instructed financial institutions to monitor their investments affected by the storm and to take reasonable efforts to stabilize their investments when necessary.

There appear to be two main takeaways for credit unions from this interagency statement.  First, credit unions should work with borrowers in affected areas to alter loan terms in a reasonable and safe manner without fear of examiner scrutiny.  And second, a credit union should reach out to its primary regulator as soon as practicable if the credit union expects to have a difficult time satisfying a particular requirement.  Better to begin a dialogue sooner rather than later to avoid notifying the regulator of an issue at the last possible moment.

Additional Resources

The NCUA’s website has additional resources that may be useful:

• Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster.  In December 2017, several agencies including the NCUA issued this examiner guidance to discuss the supervisory practices to assess financial institutions affected by a Presidential declaration of a major disaster.
• Hurricane and Disaster Information.  An NCUA webpage that includes information and links about preparedness for and recovery from disasters for credit unions and their members.
• It’s Never Too Early To Prepare For A Hurricane and Lessons Learned from the Recent Hurricanes.  NCUA webpages that discuss how credit unions can prepare for a hurricane if they are in an area susceptible to hurricanes and what credit unions can learn from the responses to recent hurricanes.

NAFCU also has a webpage that addresses Hurricane Disaster Recovery Resources.

Random Thoughts

And now for something a little more upbeat.

This photo was taken in the airport in Lisbon, Portugal on my way to Morocco.  It’s a picture of a store that sells nothing but sardines.  That by itself would make this purveyor of goods fairly unique.  But the store also had a miniature carousel, which you will find in the middle of the frame.  I think the local airports in the Washington, DC metropolitan area should take note.  Travel delays are much easier to take if there are miniature carnival rides right next to magazines, candy and bottled water.  I will be back in a few weeks with more random photos from my trip.  Take care until then.