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Special Financing for Flood Victims
by Mary Beth Guard, BOL Guru
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Question: This question would pertain to compliance, marketing and lending. Our Bank would like to offer special financing for our flood victims in our area. I need direction, as far as, being compliant.
Answer: Periodically, the FDIC has put out guidance to banks, urging them to work with victims of a disaster. The most recent guidance I've seen was related to areas hard hit by tornadoes in May, 2003. (The same type of guidance should, as a practical matter, be similarly applicable to areas affected by floods.)
It said, in part: "The FDIC encourages depository institutions in the affected disaster areas to meet the financial service needs of their communities."
It then goes on to discuss such issues as waiver of the right of rescission under Regulation Z.
Your primary concern should be safety and soundness. Sympathy for the victims should not cause you to override prudent banking practices. All your standard compliance laws and regulations will apply in the same manner they always do.
In terms of marketing special financing to victims of floods, or other disasters, you don't have to worry about Reg B implications, since there isn't an issue relating to one of the nine prohibited bases for discrimination.
First published on BankersOnline.com 8/18/03
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