Industry Letters

New York Disaster - Guidance Letter

September 14, 2001

TO EACH INSTITUTION ADDRESSED:

RE: Serving Customers Affected by the Terrorist Attacks

The New York State Banking Department (Department) strongly supports the efforts of New York State-chartered and licensed financial institutions to work with consumer and commercial borrowers temporarily affected by the terrorist attacks on Tuesday, September 11^th. The Department's position is that such efforts, if conducted in a prudent manner, are consistent with the principles of safety and soundness and the public interest. It is the Department's policy to encourage our supervised institutions under these circumstances to make reasonable efforts to alter or adjust payment terms, to waive fees under extraordinary circumstances, or to grant new loans to borrowers affected by disasters.

The Department encourages State-chartered and licensed financial institutions to:

• Work with depositors or borrowers who have been affected by the disaster.
• Consider temporarily waiving late payment charges as well as penalties for checks returned because of insufficient funds where it appears that such late payments and NSF conditions resulted from delays beyond the customer's control.
• Consider waiving penalties for early withdrawal of savings in circumstances where the customer has a demonstrable need for the funds resulting from the events of September 11th.
• Reassess the current credit needs of the community or communities and help meet those needs by making or participating in sound loans.
• Consider a prudent restructuring of an affected borrower's debt obligations, by altering or adjusting payment terms.

It is not the Department's policy to criticize prudent efforts to alter or adjust payment terms, or extend new loans to borrowers affected by disasters. Provided such efforts are made within the constraints of safety and soundness and statutory requirements, the Department will facilitate your efforts. For example:

• Any institution experiencing any significant balance sheet effects from unusually large deposit inflows/outflows or significantly increased lending to market responses from the events of September 11^th should contact the Department.
• The Department will not criticize reasonable loan documentation deficiencies arising from office relocation or personnel shortages during disasters.
• The Department will consider an institution's response to its community as an important element of its obligations under the New York Community Reinvestment Act regulations when evaluating the institution's stabilization activities in its community.

Financial institutions seeking additional guidance for assisting customers affected by the events of September 11^th are urged to contact the Department's Albany office at 518-473-6160.

Very truly yours,

Elizabeth McCaul
Superintendent of Banks