March 2, 2006
Comptroller Dugan Says Hard-Pressed Gulf Communities That Regulators 'Are Determined to do Everything We Can to be Helpful'
NEW ORLEANS – Comptroller of the Currency John C. Dugan said today regulators want to encourage partnerships between local banks and institutions outside the Gulf Coast region to make a real difference to hard-pressed communities devastated by Hurricanes Katrina and Rita.
In a speech at the Gulf Coast Bankers Conference, Mr. Dugan said regulators were in New Orleans to listen – and to learn.
"We want to gain a better understanding of the practical and technical problems you face," he said. "We want to facilitate dialogue between local bankers and those of you who are joining us from institutions outside the region. We want to encourage partnerships between you – partnerships with the potential to make a real difference to these hard-pressed communities."
"Those are the goals of this forum," Mr. Dugan said. "As regulators, we are determined to do whatever we can to be helpful."
One way regulators are helping, Mr. Dugan said, is through the recently released Community Reinvestment Act (CRA) interpretive questions and answers that allow banks to receive CRA consideration for disaster recovery-related activities that help to revitalize and stabilize a designated disaster area. While current guidance allows CRA consideration for activities undertaken within three years of a disaster designation, regulators plan to extend that period, given the long-term needs of the Gulf region, Mr. Dugan said.
Mr. Dugan also reminded bankers that regulators have authority, under Part 24 of OCC regulations, to extend CRA consideration to a national bank that makes an equity investment of any community development activity that revitalizes or stabilizes designated disaster areas.
"Although bankers have done a fine job in the first phase of dealing with the aftermath of the storms, we’re in the second phase, and the going will be slower," Mr. Dugan said. "Much has already been accomplished. But the going is still slow. Key decisions remain to be made. Clearly, this is a long-term project – a project that will require patience as well as resources to accomplish."
The Comptroller said that the toughest financial decisions bankers must make pertain to the treatment of individual loans. Regulators have tried to assist bankers by providing clear and consistent guidance, but the decisions must be made by bankers themselves on a case-by-case basis, Mr. Dugan said.
"I have told our examiners and our banks that it would be our policy not to second-guess decisions made to work with borrowers," Comptroller Dugan said. "I stand by that policy."
Mr. Dugan said that regulators want bankers to work with customers in whatever ways are most conducive to rebuilding the affected communities, while observing fundamental safety and soundness standards. In this context, it is essential, that bankers accurately assess customers’ underlying creditworthiness and repayment ability.
"The rebuilding of the Gulf Coast is a great challenge," Mr. Dugan concluded. "We also believe it’s a great opportunity."