Fed Shifts Supervisory Approach Amid COVID-19

Amid the coronavirus, the Federal Reserve Board is shifting its supervisory approach. The board said in a press release that it “recognizes that the current situation is significantly affecting areas of the country in different ways and will work with financial institutions to understand the specific issues they are facing.”

The board will decrease its examination activities for a time and the largest decrease in exercises will occur at the smallest banks. But the board said large banks should still deliver their capital plans by April 6 that they made as part of the board’s Comprehensive Capital Analysis and Review.

“The plans will be used to monitor how firms are managing their capital in the current environment,” the board noted in the release.

More time will also be given to iron out current supervisory findings that are not critical to let companies help customers and focus on increased risks in the current environment. The Federal Reserve will also home in monitoring and outreach to help financial institutions make sense of the present environment’s hurdles and risks.

In other news, the Federal Reserve Board announced a postponement of six months when it comes to policy changes to procedures that were scheduled to be implemented. Those procedures control the provision of intraday credit to U.S. branches and agencies of foreign banking organizations (FBOs).

The board ratified amendments to the PSR policy’s Part II on April 1, 2019. Those rules create the highest levels of daily overdrafts that depository institutions can obtain in their Federal Reserve accounts. The changes were set to come into effect on April 1 of this year at first.

The board noted in an announcement, “In light of the challenges posed by the coronavirus, the Board is delaying implementation until October 1, 2020. This additional time will allow FBOs and the Federal Reserve Banks to focus on heightened priorities rather than establishing new arrangements for accessing intraday credit.”