Fed Urges Banks to Help Customers Affected by BP Oil Spill


Financial institutions whose customers are affected by the BP PLC oil spill should try to expedite loans, ease credit terms and consider waiving late fees and penalties, U.S. banking regulators said Wednesday.

The announcement, made by the Federal Reserve and all the other U.S. banking regulators, comes as the Gulf region’s economy continues to struggle with the impact of the spill. BP has already paid out more than $132 million in claims filed for economic damages, but many Gulf coast residents continue to worry about how they will get enough money to pay their bills and keep their businesses running. Many of the businesses affected by the spill are already in debt from past loans they had to take out after the area was hit by Katrina and several other major hurricanes.

“The regulators encourage financial institutions to work with their customers and consider measures to assist borrowers affected by this situation and its subsequent impact on local communities,” the Fed and other regulators said. “Efforts taken by financial institutions to work with their borrowers and customers in affected communities, if conducted in a reasonable and prudent matter, are consistent with safe and sound banking practice.”

Regulators urged banks to consider waiving late payment charges, ATM fees and penalties for withdrawing savings too early.

They also urged banks to expedite loans if possible, extend or restructure debt in anticipation of their customers’ future receipt of claims from BP, and ease credit terms or loan fees.

“These measures could help customers recover financially and be better positioned to honor their obligations,” they said. They added that banks will still be expected to recognize credit losses as soon as they are estimated.

The announcement was made Wednesday by the Fed, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Banking Supervisors.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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