Capital Brief: Comptroller Wants to Check Flood Coverage

The Office of the Comptroller of the Currency on Monday proposed a regulation that would require examiners to assess banks' compliance with flood insurance laws and regulations.

The rule, meant to implement a provision in last year's Riegle Community Development and Regulatory Improvement Act, also would allow regulators to fine lenders that violate flood insurance laws and regulations.

The rule would not require financial institutions to review their portfolios to determine if flood insurance coverage were adequate. However, the Comptroller's office is seeking comment on whether such a policy should be in place for institutions holding loan collateral that is exposed to high flood risk.

After approval by other financial institution regulatory agencies, the proposal is to be published as a joint agency regulation in the Federal Register. Comments would be accepted for 60 days.

The Federal Deposit Insurance Corp. board is expected to approve the rule today.

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