As states and local municipalities make the decisions about how and when to end their communities’ economic shutdown imposed in response to the COVID-19 pandemic, the OCC cautioned governors and local leaders on the risks to the nation’s banking system created by state and local lockdown orders.
Acting Comptroller of the Currency Brian P. Brooks has urged state governors and local leaders to carefully consider the adverse impact on the nation’s banking system resulting from regional lockdown orders and economic shutdown as they begin the process of lifting those orders. In a letter to the U.S. Conference of Mayors released by the OCC, Brooks said that "certain aspects of these orders potentially threaten the stability and orderly functioning of the financial system the OCC is charged by law to protect." He requested that the state and local officials "consider these risks carefully and weigh them against the scope and duration of continued lockdown orders."
According to Brooks, the extended stay at home orders in many states have put commercial real estate loan collateral at risk due to lengthy property vacancies, potential damage, and lack of revenue needed to pay their loan obligations. "[H]igh delinquency rates have the potential to threaten the community and mid-size banks that are the economic lifeblood of local communities, a factor that your members should take into account in weighing the risks and benefits of lengthy continued lockdown orders," the letter said. In addition, Brooks pointed out that vague and varying criteria that determines what is an essential business has made it difficult for banks and regulators to understand, forecast, and reserve for risks based on sound data thereby depriving banks of a key financial risk management tool.
Brooks also contended that "lengthy and potentially permanent requirements that individuals wear face masks in many or even all public spaces create the very real risk of increases in bank robberies." Acknowledging that face mask requirements "may have been a prudent decision when the extent of the health risk was still unknown," Brooks said that "reports of face-covering-related robberies at bank branches and other establishments make clear that broadly applicable face mask requirements are not safe or sustainable on a permanent basis."
MainStory: TopStory BankingFinance BankingOperations Covid19 CrimesOffenses FedTracker FinancialStability Loans
Interested in submitting an article?
Submit your information to us today!Learn More
Banking and Finance Law Daily: Breaking legal news at your fingertips
Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on banking and finance legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.