This letter announces that the Federal Reserve and the other Federal Financial Institutions Examination Council (FFIEC) members1 have issued the attached Joint Statement on Additional Loan Accommodations Related to COVID-19. This statement discusses risk management principles relevant to institutions that work with their borrowers as loans near the end of initial loan accommodation periods related to COVID-19. The statement includes principles for considering accommodation options and for restructuring safe and sound credit extensions going forward. The agencies encourage financial institutions to consider prudent accommodation options that can ea
The Federal Financial Institutions Examination Council on behalf of its members today issued a statement setting forth prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers as initial coronavirus-related loan accommodation periods come to an end and they consider additional accommodations.
The COVID event has had a significant adverse impact on consumers, businesses, financial institutions, and the economy. To address some of these impacts, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides several forms of relief to business and individual borrowers, and some states and localities have taken action to provide similar credit accommodations. Also, many financial institutions have voluntarily offered other credit accommodations to their borrowers.
As initial loan accommodation periods come to an end, some borrowers may be able to resume contractual payments, and others may be unable to meet their obligations due to continuing financial challenges. The agencies encourage financial institutions to consider, when appropriate, prudent options for additional accommodations that can ease cash flow pressures on affected borrowers, improve their capacity to service debt, and facilitate the financial institution’s prudent management of its loans, consistent with applicable laws and regulations.