Federal agencies this week issued supplemental guidance to theirOct. 30 statements about financial institutions and borrowersaffected by Hurricane Sandy.

The agencies include the Board of Governors of the FederalReserve System, the Federal Deposit Insurance Corporation, theNCUAand the Office of the Comptroller of the Currency.

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Prudent efforts by institutions to meet customers' cash andfinancial needs generally will not be subject to examinercriticism, the guidance said. When consistent with safe and soundbanking and credit union practices, these efforts may include:

• Waiving ATM fees for customers and non-customers
• Increasing ATM daily cash withdrawal limits
• Waiving overdraft fees
• Waiving early withdrawal penalties on time deposits
• Waiving availability restrictions on insurance checks
• Easing restrictions on cashing out-of-state and non-customerchecks
• Easing credit card limits and credit terms for new loans
• Waiving late fees for credit card and other loan balances
• Offering payment accommodations, such as allowing loancustomers to defer or skip some payments or extending the paymentdue dates, which would avoid delinquencies and negative creditbureau reporting caused by storm-related disruptions

The agencies realize the effects of natural disasters on localbusinesses and individuals are often transitory, the guidance said,and prudent efforts to adjust or alter terms on existing loans inaffected areas should not be subject to examinercriticism.

However, financial institutions should perform acomprehensive review of an affected borrower's financial conditionin an effort to implement a prudent loan workoutarrangement.

When conducting examinations and other supervisory activities,examiners will consider the unusual circumstances institutions arefacing in the affected areas. An institution that implementsprudent loan workout arrangements will not be subject to criticismfor engaging in these efforts even if the restructured loans haveweaknesses that result in adverse classification or credit riskgrade downgrade.

The agencies remind financial institutions that all restructuredloans should be evaluated to determine whether a loan should bereported as a troubled debt restructuring. This evaluationshould be based on the facts and circumstances of each borrower andloan; this requires judgment since not all modifications are TDRs,the guidance said.

Financial institutions should refer to the instructions for theConsolidated Reports of Condition and Income (for banks and savingsassociations) and the 5300 Call Report (for credit unions);Accounting Standards Codification Subtopic 310-40, “Receivables –Troubled Debt Restructurings by Creditors”; and other supervisoryguidance for the accounting and reporting of TDRs.

Financial institutions may receive CRA consideration forcommunity development loans, investments or services thatrevitalize or stabilize federally designated disaster areas intheir assessment areas or in the states or regions that includetheir assessment areas.

For additional information, institutions should review theInteragency Questions and Answers Regarding CommunityReinvestment at http://www.ffiec.gov/cra/pdf/2010-4903.pdf

The agencies also said that they recognize many people displacedor adversely affected by a disaster or emergency may not haveaccess to their normal identification and personal records. Under the Customer Identification Program requirements of the BankSecrecy Act, financial institutions must obtain, at a minimum, anindividual's name, address, date of birth, and taxpayeridentification number or other acceptable identification numberbefore opening an account.

The agencies encourage institutions to be reasonable in theirapproach to verifying the identity of individuals temporarilydisplaced by Hurricane Sandy.

Recognizing the urgency of this situation, the agencies remindinstitutions that the CIP requirements of the BSA provideorganizations the flexibility to use documents, non-documentarymethods, or a combination to verify a customer's identity.

Moreover, the regulation provides that verification of identitymay be completed within a reasonable time after the account isopened. An institution in an affected area, or dealing withnew customers from the affected area, may amend its CustomerIdentification Program immediately and obtain required boardapproval for program changes as soon as practicable, the guidancesaid.