Historic. Unprecedented. Unimaginable. These are not exaggerations of the coronavirus pandemic, an event that has left millions unemployed and countless businesses shuttered or operating at limited capacity. Until this health crisis subsides, the financial sector has an important role to play in helping affected consumer and commercial customers navigate this uncertain situation.
Ironically, a financial institution’s ability to meet that challenge largely depends on the basic tenets of good governance and sound risk management—measures that are quite precedented in helping to ensure the financial health and compliance stance of institutions that adopt, implement and consistently use them.
This summer, federal and state banking regulators offered a timely reminder of this truth when they published their Interagency Examiner Guidance for Assessing Safety and Soundness Considering the Effect of the COVID-19 Pandemic on Institutions.
Examining Safety and Soundness for Financial Institutions in 2020
The guidance was jointly published on June 23 by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA) and state bank and credit union regulators. It outlines the supervisory principles they will use to assess institutional safety and soundness in light of COVID-19.
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