Federal regulators ask banks to cut Gulf Coast oil spill victims some slack

Federal banking regulators are urging banks to aid customers reeling from the Gulf of Mexico oil spill by temporarily waiving late payment charges and speeding up lending decisions, among other steps.

A joint statement Wednesday from the Federal Reserve and several other agencies cites the “substantial” damage to businesses along the Gulf Coast from the spill, which has idled fishing boats and battered the region’s tourism industry.

The regulators say financial institutions “can take measures to meet the critical financial needs of their customers and their communities.”

“Efforts taken by financial institutions to work with their borrowers and customers in affected communities, if conducted in a reasonable and prudent manner, are consistent with safe and sound banking practice,” states the Federal Reserve Board of Governors, along with the Federal Deposit Insurance Corporation, the National Credit Union Administration and other agencies.

They say banks should consider steps including temporarily ending penalties for early withdrawals of savings; extending or restructuring debt for customers who anticipate receiving claims from BP; and easing certain credit terms and fees.

“These measures could help customers recover financially and be better positioned to honor their obligations. In the affected areas, these efforts can contribute to the health of the local community and the long-term interests of the institution and its customers,” the regulators said.

They also vowed to keep watch over how the spill is affecting the banks.

“Consistent with the regulators’ longstanding practice of assessing the financial condition of institutions directly affected by natural and other disasters, examiners will consider the unusual circumstances of banks and credit unions in affected areas in determining the appropriate supervisory response to safety-and-soundness issues,” the regulators said.