[Federal Register Volume 59, Number 124 (Wednesday, June 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15757]
[[Page Unknown]]
[Federal Register: June 29, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Depository Institutions Disaster Relief Act Study
AGENCY: Department of the Treasury.
ACTION: Request for comments.
-----------------------------------------------------------------------
SUMMARY: The Secretary of the Treasury (Secretary), in consultation
with the federal bank regulatory agencies, is conducting a study of the
effectiveness of the federal banking agencies' response to recent
disasters, as directed by section 5 of the Depository Institutions
Disaster Relief Act (DIDRA) of 1993, Pub. L. No. 103-76. Pursuant to
DIDRA, the study group intends to complete the study by February 12,
1995, and will submit to Congress a final report containing a detailed
statement of findings, conclusions, and, as appropriate,
recommendations for administrative or legislative action.
In recognition of the need to consult the private sector and gather
information needed for the study, this notice invites all interested
parties to present their views on the topics discussed below and on any
other issues relating to the study that they may wish to bring to the
attention of the study group. The study group strongly encourages all
interested parties to submit comments for the record.
DATES: Comments must be received by August 29, 1994.
ADDRESSES: Interested parties are requested to submit written data,
views, or arguments regarding any or all of the topics discussed below
or otherwise relevant to the study. A public file containing all the
public comments will be maintained at the Department of the Treasury.
Comments should be sent via mail or facsimile to: Depository
Institutions Disaster Relief Act Study, Department of the Treasury,
Room 3025, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.
Facsimile number (202) 622-0256.
FOR FURTHER INFORMATION CONTACT:For further information, please
contact: Gordon Eastburn, Director of the Office of Financial
Institutions Policy, at 202-622-2730; F. Bruce Cohen, Financial
Analyst, at 202-622-2157; or John B. Lewis, Financial Analyst, at 202-
622-0715.
SUPPLEMENTARY INFORMATION: On August 12, 1993, the President signed
into law the Depository Institutions Disaster Relief Act of 1993
(DIDRA), Pub. L. No. 103-76. Section 5 of DIDRA directed the Secretary
of the Treasury to conduct a study evaluating the effectiveness of the
Depository Institutions Disaster Relief Act of 1992 (Pub. L. No. 102-
485) and DIDRA 1993 in facilitating recovery from disasters consistent
with the safety and soundness of depository institutions. The Secretary
is directed to consult with the Comptroller of the Currency (OCC), the
Office of Thrift Supervision (OTS), the Federal Reserve Board (FRB),
and the Federal Deposit Insurance Corporation (FDIC).
Need for Depository Institutions Disaster Relief Act Study
In the last three years, many regions of the United States have
suffered various types of disasters, from hurricanes in Hawaii,
Florida, and Louisiana to flooding in the Midwest to earthquakes and
civil unrest in California. Such disasters not only disrupt the
financial system, but also strain its ability to cope with borrowers
who may fall behind on loan payments because of income fluctuations;
home and business owners who seek to combine, en masse, insurance
proceeds and borrowed funds in order to rebuild; and the need of all
parties to obtain faster access to cash despite rules concerning the
availability of deposited funds.
The federal government has sought to alleviate such problems
through regulation and the enactment of two laws that streamline the
financial transactions process. We are now conducting a study to
determine whether these legislative and administrative actions have in
fact helped. In addition, we request comments on whether additional
administrative or legislative actions would be beneficial. Disasters
cannot be prevented, but we can learn how best to cope with them.
Depository Institutions Disaster Relief Act of 1992
As a result of disasters in 1991 and 1992, namely, Hurricanes
Andrew and Iniki and civil unrest in Los Angeles, Congress passed the
Depository Institutions Disaster Relief Act of 1992. The Act was
designed to facilitate recovery from the disasters by providing greater
flexibility for depository institutions and their customers. The Act
allowed the agencies to grant temporary waivers of certain regulations
for institutions located in disaster areas if the waiver would
facilitate recovery from the disaster and was consistent with safety
and soundness. The major provisions of the Act are delineated below.
The agencies received permanent authority to make
exceptions to certain appraisal requirements in disaster areas
consistent with safe and sound banking practices. The waivers would
expire within three years after the date of declaration. This allowed
borrowers to rebuild their homes or businesses with borrowed funds
without incurring the delay and expense of such requirements as
obtaining an appraisal.
The agencies received temporary authority to make certain
exceptions to the Truth in Lending and the Expedited Funds Availability
Acts. Exceptions would expire one year after the date of a disaster
declaration.
The agencies received authority to accommodate
extraordinary asset growth at financial institutions resulting from the
deposit of governmental assistance and insurance proceeds after a
disaster. Specifically, regulators could permit certain qualified
institutions to subtract governmental assistance and insurance proceeds
from their asset base when calculating their leverage ratio. The
allowances would last for up to 18 months after the date of enactment.
The Act also expanded the community development authority of
national banks and state member banks to invest up to ten percent--
rather than five percent--of their capital to promote the welfare of
low- and moderate-income communities. The Act also encouraged
depository institutions in disaster areas to meet community credit
needs.
Depository Institutions Disaster Relief Act of 1993
As a result of flooding in the Midwest during the spring and summer
of 1993, the Congress passed the Depository Institutions Disaster
Relief Act of 1993. Like DIDRA of 1992, the Act was designed to
facilitate recovery from the disaster by providing greater flexibility
for depository institutions and their customers. Under DIDRA of 1992,
the agencies maintained authority to waive real estate appraisal
regulations for real estate-related transactions affected by the
disaster. However, because the waivers concerning the Truth in Lending
Act, Expedited Funds Availability Act, asset growth, and the notice
provisions of the Administrative Procedures Act were temporary, they
were reenacted in DIDRA 1993.
Under section 2 of DIDRA of 1993 exceptions may be granted
from the Truth in Lending Act and the Expedited Funds Availability Act.
Under section 3 of DIDRA of 1993, financial institutions
may seek until April 1, 1995, 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.
Other Regulatory Actions
In addition to the statutory measures provided for under the two
laws discussed, above, the federal bank regulatory agencies have
exercised preexisting authority in assisting financial activity in
disaster areas.
Office of the Comptroller of the Currency: The OCC encouraged
national banks in disaster areas to work with borrowers by extending
terms of repayment or restructuring borrowers' debt obligations and to
ease credit-extension terms for new loans with certain borrowers,
consistent with prudent banking practices. Moreover, the OCC stated
that it would take into account the unusual circumstances in dealing
with any increases in the level of delinquent and nonperforming loans
caused by the Floods.
Office of Thrift Supervision: The OTS encouraged savings
associations operating in the affected areas to: work with sound
borrowers to restructure or increase their loans if necessary to
finance reconstruction or repair activities; consider temporarily
waiving charges for late payments and early withdrawal penalties on
deposits; reach out to local communities, governments, and community
organizations to assess local credit needs and determine what
assistance might facilitate disaster recovery; take advantage of
disaster relief programs available in the community; and, if necessary,
request a temporary waiver of the Qualified Thrift Lender Test to
enable the thrift to provide credit to small businesses in affected
areas.
Federal Reserve Board: The FRB adopted a supervisory statement that
encouraged regulated financial institutions to work constructively with
borrowers who are experiencing difficulties due to conditions beyond
their control. The Federal Reserve stated that it would consider the
unusual circumstances the institutions in disaster areas face in
determining any supervisory action. Further, the Federal Reserve would
consider granting an extension for filing reports to institutions
encountering difficulty in meeting reporting requirements and would
give positive consideration in its Community Reinvestment Act (CRA)
compliance assessment to a bank's efforts to provide loans to low- and
moderate-income borrowers affected by the disaster. The Federal Reserve
also approved temporary relief from Regulation Z (which implements the
Truth in Lending Act) regarding consumer waivers of the right to cancel
certain home-secured loans so that borrowers could more readily gain
access to loan funds.
Federal Deposit Insurance Corporation: The FDIC undertook a number
of administrative actions including: notifying banks that they would
not be criticized for prudent efforts to restructure or extend terms
for borrowers; extending its ``low documentation loan program'' to
affected areas; giving positive consideration in its CRA compliance
assessment to a bank's efforts to provide loans to low- and moderate-
income borrowers affected by the disaster; and notifying its banks that
it would consider any causes beyond the control of a reporting
institution in considering how long a delay in filing reports would be
acceptable.
Questions for Respondents
Bank Customers
(1) Did your depository institution offer special services to
borrowers and depositors to facilitate disaster recovery
Yes ________ No________
Please explain.
(2) If so, did you find them beneficial?
Depository Institutions
(3) Please identify your institution's primary federal financial
regulator:
OCC________ OTS________ FRB________ FDIC________
Other ________ Please identify ________
(4) Did you use the Depository Institutions Disaster Relief Acts
(DIDRA) of 1992 and 1993 provisions relating to:
Yes ________ No________ real estate appraisals ________ (number of
times, if known);
Yes ________ No________ Truth-in-Lending Act ________ (number of times,
if known);
Yes ________ No________ Expedited Funds Availability Act ________
(number of times, if known);
Yes ________ No________ leverage capital ratio requirements?
(5) Did you utilize the administrative actions taken by the
regulators relating to:
Yes ________ No________ restructuring debt for borrowers ________
(number of times, if known);
Yes ________ No________ delaying filing reports ________ (number of
times, if known);
Yes ________ No________ waiving charges for late payments or early
withdrawal ________ (number of times, if known);
(6) Should any of the DIDRA provisions be made permanent? If so,
why? Please identify any specific problems you believe would arise
without those provisions.
All Interested Parties
(7) Are you located in an area that has been designated a
``disaster area'' by the President in the last five years?
Yes ________ No________ Year ________ Disaster ________
(8) If so, did you encounter any financial transaction problems in
the disaster?
(9) What other legislative and/or administrative actions should be
taken in future disaster areas to facilitate financial transactions?
Dated: June 15, 1994.
Richard S. Carnell,
Assistant Secretary (Financial Institutions), Department of the
Treasury.
[FR Doc. 94-15757 Filed 6-28-94; 8:45 am]
BILLING CODE 4810-25-M
