ICBA issued a comment letter expressing support for an agency effort to provide clearer guidance on prudent commercial real estate loan accommodations and workouts while suggesting improvements to the proposal.
Agency Proposal: The FDIC and OCC proposal would update a 2009 interagency policy statement on working with creditworthy borrowers during times of financial stress. It would incorporate:
Recent policy guidance on short-term loan accommodations.
Revisions to reflect accounting developments for estimating loan losses.
Revised and additional examples of CRE loan workouts and accommodations.
ICBA Comments: In addition to supporting updates that will promote clear guidance to community banks while memorializing current practices, ICBA suggested:
Clarifying regulatory expectations on updating financial and collateral information for distressed borrowers.
Clarifying that “market conditions” should be primarily informed by trends within local markets.
Requiring examiners to supply empirical data if a bank and its experts disagree with regulators about adjustments to collateral valuation.
Fed Update: The Federal Reserve Board last week invited comment on identical updates to its guidance, with a 60-day comment period.
