The OCC and FDIC are holding off on easing debt limits in response to the coronavirus pandemic, leaving billions of dollars locked up at banking subsidiaries that could be used for lending amid the deepening economic crisis.
After Congress temporarily lowered the leverage ratio used by smaller institutions, the federal agencies said they would allow a one-year transition before banks have to comply again with the regular standard.
Regulators point to traditional financial institutions as well-positioned to meet short-term credit needs during the coronavirus pandemic, but there are still a host of questions about whether the industry should try to compete with high-cost lenders.
The agencies will give the industry another month to submit feedback on the so-called covered fund portion of the rule "in light of potential disruptions resulting from the coronavirus.”
The ICBA chief’s plea for a six-month halt to regulations not related to the pandemic followed similar calls by community groups and a key Senate Democrat.
The joint statement said examiners will not impede banks’ responsible efforts to offer open lines of credit, closed-installment loans or other products to borrowers dealing with fallout from the pandemic.
Accommodations for borrowers affected by the coronavirus pandemic, such as payment delays and fee waivers, are "positive and proactive actions that can manage or mitigate adverse impacts," the regulators said.
The Ohio Democrat argued that the public wouldn't be able to meaningfully provide feedback on rules given the stressful circumstances related to the outbreak.
