U.S. Agencies Urge Banks to Work With Customers Hit by Virus

(Bloomberg) -- The Federal Reserve and other U.S. regulators urged financial institutions to “meet the financial needs of customers and members affected by the coronavirus,” as the outbreak threatened the economy and roiled markets.

“The agencies recognize the potential impact of the coronavirus on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision,” they said in a joint statement on Monday.

Regulatory forbearance is one of the options used during episodes like natural disasters to prevent a credit crunch. The other entities signing on to Monday’s statement included the Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., National Credit Union Administration, Office of the Comptroller of the Currency and Conference of State Bank Supervisors.

“Financial institutions should work constructively with borrowers and other customers in affected communities,” they said. “Prudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.”

The advisory came after Senate Democrats wrote to regulators and banks with specific proposals on how to help households and companies cope with the fallout from the virus. Democrats asked regulators to assure that consumer credit scores wouldn’t suffer due to disruptions caused by the global epidemic and to modify terms on existing loans if necessary.

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Scott Lanman

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