Supervision and Regulation Letters

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SR 20-15:

Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Institutions

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF
SUPERVISION AND REGULATION

SR 20-15
June 23, 2020

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Institutions

Applicability: This guidance is relevant for insured depository institutions, U.S. operations of foreign banking organizations (FBOs), bank holding companies, savings and loan holding companies, federally insured credit unions, and Edge Act corporations.

The federal financial institution regulatory agencies,1 in consultation with the Conference of State Bank Supervisors (CSBS), are jointly issuing the attached examiner guidance2 to promote consistency in the supervision and examination of financial institutions affected by the COVID-19 pandemic in response to the Presidential declaration of a national emergency.3

External events, such as COVID-19, can adversely impact an institution's financial condition and operational capabilities even when management has incorporated appropriate governance and risk management systems to identify, monitor, and control risks. The interagency guidance instructs examiners to consider the unique, evolving, and potential long-term nature of the issues confronting institutions and to exercise appropriate flexibility in their supervisory response. In assessing the safety and soundness of an institution, examiners will consider the institution's asset size, complexity, and risk profile, as well as the industry and business focus of its customers.

Examiners will continue to assess institutions in accordance with existing policies and procedures and may provide feedback, or possibly downgrade an institution's examination rating, if conditions at the institution deteriorate. However, in conducting their supervisory assessment, examiners will consider whether institution management has managed risk appropriately, including taking appropriate actions in response to stress caused by COVID-19 impacts.

Reserve Banks are asked to distribute this letter to the supervised organizations in their districts, as well as to appropriate supervisory and examination staff. Questions regarding this guidance should be directed to the following staff in the Board's Division of Supervision and Regulation:

  • Large Institution Supervision Coordination Committee (LISCC) firms: Christine Graham, Assistant Director, (202) 452-3005.
  • Large and Foreign Banking Organizations (LFBOs): Tricia Squillante, Manager, (202) 641-0622.
  • Community and Regional Banking Organizations Supervision: Karen Caplan, Assistant Director, (202) 452-2710; and Keith Coughlin, Assistant Director, (202) 452-2056.

Supervised institutions with specific questions concerning their examination and supervisory activities should direct these questions to their Reserve Bank point of contact or the examiner in charge. In addition, supervised organizations may send general questions via the Board's public website.4

signed by
Michael S. Gibson
Director
Division of
Supervision and Regulation

Attachments:
Notes:
  1. The federal financial institution regulatory agencies include: the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration (collectively, referred to as "the supervisory agencies"). Return to text.
  2. See June 23, 2020, Board press release at:  https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200623a.htm. Return to text.
  3. Proclamation 9994, 85 Federal Register 15337 (March 18, 2020). Return to text.
  4. See http://www.federalreserve.gov/apps/contactus/feedback.aspx. Return to text.
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Last Update: June 23, 2020