WASHINGTON -- Federal regulators on Thursday reached out to banks in the flood-ravaged Midwest by relaxing a variety of rules.

The Comptroller of the Currency and the Federal Deposit Insurance Corp. pledged that their examiners will go easy on banks that relax loan terms for customers hit hard by the flooding.

Getting flood victims back on their feet is in the long-term best interest of the banks and their communities, the regulators said in separate statements Thursday.

The FDIC is offering a Community Reinvestment Act carrot to the state-chartered banks it supervises.

The FDIC said that in determining a bank's CRA rating it would look favorably on financing provided to low-income and moderate-income borrowers in flood areas, even if they are outside the bank's market.

In addition to extending repayment schedules for existing loan customers, the agencies said, banks may extend new credit on more lenient terms without fear of criticism from examiners.

Banks that see a jump in a deliquent and nonperforming loans can expect the same examiner mercy, the Comptroller's office and FDIC agreed.

Appraisal Requirement Stayed

Banks that were adequately capitalized before the disaster may let their leverage capital ratios slip if assets grow temporarily because customers are depositing government assistance funds or insurance proceeds.

Certified property appraisals will not be needed on affected real estate for up to three years, the regulators said.

The agencies also are giving banks in flooded areas more time to file June 30 call reports. The amount of time depends on the bank's individual circumstances.

Finally, for banks that have damaged branches or want to set up temporary branches near flood victims, the regulators agreed to waive the formal application process.

For state-chartered member banks and bank holding companies, the Federal Reserve Board is expected to issue a similar statement soon. For thrifts, the Office of Thrift Supervision eased many of the same rules last week.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.