Fed To Resume Bank Exams After Scaling Back For Pandemic

By Jon Hill
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Law360 (June 15, 2020, 5:12 PM EDT) -- The Federal Reserve announced Monday that it is resuming examinations for banks of all sizes after giving them a temporary breather to acclimate themselves to the operational challenges of the COVID-19 pandemic and focus on helping affected customers.

Nearly three months after the Fed said it was halting routine exams for banks with total assets under $100 billion and postponing some exam work for larger banks, the central bank said that it is picking back up where it left off.  

"As financial institutions have had time to implement contingency operating plans and adapt operations to the COVID-19 operating environment, the Federal Reserve is resuming examination activities for all firms, including financial institutions with total consolidated assets of less than $100 billion," the Fed said in a statement.

The Fed announced in March that it was recalibrating its supervisory approach to take some pressure off banks so they could concentrate on grappling with the immediate disruptions of the pandemic and providing assistance to customers. As part of that recalibration, the Fed said it would put more emphasis on outreach and monitoring and temporarily pause its noncritical, routine bank exam activities for midsize and smaller banks. Bigger banks, meanwhile, were going to see "a significant portion" of their exam work deferred, the Fed said.

Although the Fed signaled Monday that this break is coming to an end, the central bank said it won't be a full return to normal.

"We anticipate that examination activities, including full scope examinations, will be conducted offsite until conditions improve to facilitate on-site examinations," the Fed said.

The central bank also said it understands some banks may not be out of the woods yet and advised them to coordinate with their regional Fed and state banking regulators "if they have questions on planned supervisory activities."

"The Federal Reserve recognizes that the current situation is significantly affecting institutions and communities in different ways, through no fault of their own, and will work with financial institutions to understand the specific issues they are facing," the Fed said.

--Editing by Alanna Weissman.

For a reprint of this article, please contact reprints@law360.com.

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