Regulators pledge support for institutions in Hawaii's wildfire zone

PATRICK T. FALLON/Photographer: Patrick T. Fallon/

WASHINGTON — Banks and credit unions impacted by the Hawaii wildfires should work compassionately with customers — especially borrowers in devastated areas who need flexibility — yet still prudently manage risk, state and federal regulators said Thursday.

"In supervising institutions affected by the Hawaii wildfires, the agencies will consider the unusual circumstances these institutions face," the regulators explained in jointly-issued guidance. "The agencies recognize that efforts to work with borrowers in communities under stress can be consistent with safe-and-sound practices as well as in the public interest."

The guidance from the Federal Reserve Board, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Hawaii Department of Commerce and Consumer Affairs and the National Credit Union Administration urged the financial institutions they oversee to continue to meet the needs of their communities. It also acknowledged the serious impact on banks and customers alike of the recent wildfires that struck the island of Maui. The agencies said they plan to provide appropriate regulatory assistance to affected institutions under their purview.

In light of the various facilities destroyed or made uninhabitable by the fires, the agencies said they will expedite requests for temporary banking facilities to help maintain continuity of banking services. Banks can now start the approval process for a temporary facility with as little as a telephone call to their primary federal or state regulator before they submit a formal written request. The guidance also encouraged banks to contact their regulator to report any difficulty in complying with publishing requirements applicable to new, existing or relocated branches.

In addition to outlining steps financial institutions can take to address on-site disruptions, the agencies encouraged them to contact their primary regulator to address any fire-related regulatory compliance lapses. They said agency staffers will take the crisis conditions into account and reward good-faith efforts.

"The agencies do not expect to assess penalties or take other supervisory action against institutions that take reasonable and prudent steps to comply with the agencies' regulatory reporting requirements if those institutions are unable to fully satisfy those requirements because of the Hawaii wildfires," the guidance noted.

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The agencies also noted areas where banks can take the opportunity to uplift their communities in a time of need, which is also a standard banks are held to under the Community Reinvestment Act. Banks may receive CRA consideration for community development loans, investments, or services related to the disaster within their assessment areas, the agencies said.

Financial institutions were also alerted to monitor municipal loans and securities affected by the fires and to keep an eye on assets that have been compromised in the disaster.

"The agencies realize local government projects may be negatively affected by the disaster and encourage institutions to engage in appropriate monitoring and take prudent efforts to stabilize such investments," the agencies said.