Fed to Suspend Some Bank Supervision

WASHINGTON (AP) -- The Federal Reserve said it will suspend some of its bank supervisory activities to give banks more leeway in dealing with financially strapped customers.

The Fed said it will cease nearly all examinations for banks with less than $100 billion in total assets, except for those reviews "critical to safety and soundness or consumer protection." For larger banks above that threshold, the Fed will postpone most of its examinations, based on how burdensome the scrutiny would be for each bank.

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Tuesday's announcement follows earlier efforts by the Fed and other banking regulators to lighten regulatory oversight during the viral outbreak. The Fed is encouraging banks to work with borrowers who are unable to pay all their debts because of the coronavirus, which has crippled the economy and caused potentially millions of layoffs.

"The Federal Reserve understands that this unique and evolving situation could pose temporary business disruptions and challenges that affect banks, businesses, consumers, and the economy," the central bank said in a statement.

The Fed said it will focus on monitoring the banking system, which includes "understanding the challenges and risks that the current environment presents for customers, staff, for firm operations and financial condition, and for the largest firms, the risks to financial stability."

On Sunday, the Fed and five other banking regulators said that banks that modified loans for people or businesses struggling to repay wouldn't have to hold more capital against those loans, as they have been required to do so in the past. That would make it easier for banks to allow easier repayment terms on some troubled loans.

(KR)

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