March 10, 2020

Coronavirus: Regulators release pandemic planning guidance, urge FIs to support consumers


In the wake of the coronavirus, the Federal Financial Institutions Examination Council (FFIEC) last week released pandemic preparedness guidance to help financial institutions address risks and minimize negative impacts of a pandemic. In addition, federal and state regulators Monday encouraged financial institutions to support consumers who may face financial hardships as a result of the virus.

Democrat members of the Senate Banking Committee had sent letters to financial regulators, including the NCUA, earlier Monday urging guidance to allow financial institutions to provide consumers that could face financial hardships as a result of the coronavirus with loan and credit relief.

In a statement yesterday afternoon from the Federal Reserve, CFPB, FDIC, NCUA, Office of the Comptroller of the Currency, and Conference of State Bank Supervisors, the agencies said they would "provide appropriate regulatory assistance to affected institutions subject to their supervision."

"Regulators note that financial institutions should work constructively with borrowers and other customers in affected communities," the agencies' statement said. "Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism."

In addition to the letter to agencies, the Senate Banking Committee members sent letters to presidents of financial trade organizations, including NAFCU's Dan Berger, asking that the groups support employees with policies that promote health and safety and also encourage members to work with consumers facing financial difficulties.

The FFIEC pandemic planning guidance highlighted the differences between it and traditional business continuity planning given the unique challenges of not knowing the scale or duration of a pandemic.

"The nature of the global economy virtually ensures that the effects of a pandemic event will be widespread and threaten not just a limited geographical region or area, but potentially every continent," the FFIEC statement said. "In addition, while traditional disasters and disruptions normally have limited time durations, pandemics generally occur in multiple waves, each lasting two to three months. Consequently, no individual or organization is safe from the adverse effects that might result from a pandemic event."

Of note, one of the biggest challenges expected from a severe pandemic is staffing shortages due to absenteeism.

To address pandemic concerns, the FFIEC recommends financial institutions' business continuity plans should address:

  • preventative programs to limit disruptions related to tracking outbreaks, educating employees, and communicating effectively;
  • a strategy for scaling efforts in response to an outbreak, using frameworks provided by the Centers for Disease Control and Prevention (CDC) for that scaling;
  • a comprehensive framework of facilities, systems and procedures in the event staff are unavailable for extended periods;
  • a testing program; and
  • oversight of programs.

The statement provides additional resources for financial institutions to access as they prepare and update business continuity and pandemic plans.

NAFCU is closely monitoring the situation and has developed a resource page online to direct credit unions to CDC and World Health Organization resources, as well as to provide regular updates on the status of NAFCU conferences. The association previously encouraged credit unions to review their business continuity plans to address the coronavirus.