Regulatory Alerts2006-02-09
OFI Bulletin 01-2006 Supervisory Guidance for Hurricane-Affected Financial Institutions
The Office of Financial Institutions, alongside federal and state regulators, issued joint supervisory guidance establishing examination procedures for financial institutions directly impacted by Hurricane Katrina. Examiners must evaluate CAMELS components while granting flexibility for disaster-induced external weaknesses, ensuring that loan classifications, capital restoration plans, and liquidity assessments accurately reflect temporary economic disruptions rather than permanent institutional failure. The guidance mandates that affected institutions maintain robust internal risk assessments, appropriately classify loans and municipal bonds based on insurance recoveries and borrower repayment capacity, and preserve prudent underwriting standards without triggering automatic administrative actions for hurricane-related rating declines.