On March 24, 2020, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) issued a statement on its supervisory activities (“Statement”) during the unprecedented COVID-19 pandemic.  As part of that Statement, the Federal Reserve indicated that “to minimize disruption and burden on financial institutions, the Federal Reserve is reducing its focus on examinations and inspections at this time.”  In its effort to minimize the regulatory burdens placed on financial institutions, the Federal Reserve made the following pronouncements:

• Applicable to All Financial Institutions. Any examination activities will be conducted off-site until normal operations are resumed at the bank and the applicable Federal Reserve Bank.

• Applicable to Financial Institutions with Less Than $100 Billion in Assets. For financial institutions with less than $100 billion in total consolidated assets, the Federal Reserve intends to “cease all regular examination activity, except where the examination work is critical to safety and soundness or consumer protection, or is required to address an urgent or immediate need.”

• Applicable to Financial Institutions with More Than $100 Billion in Assets. For institutions with total consolidated assets greater than $100 billion, the Federal Reserve intends to defer a significant portion of planned examination activity based on its assessment of the burden on the institution and the importance of the exam activity to the supervisory understanding of the firm, consumer protection or financial stability.  With respect to the upcoming Comprehensive Capital Analysis and Review, or CCAR, exercise, firms should submit the capital plans that they have developed by April 6, 2020.  The plans will be used to monitor how firms are managing their capital in the current environment, planning for contingencies, and positioning themselves to continue lending.

• These changes to the Federal Reserve’s examination cycle will be reassessed during the last week of April 2020.

We note that the Statement is only applicable to institutions supervised by the Federal Reserve, including state member banks, bank holding companies, savings and loan holding companies, Edge Act Corporations, and the U.S. operations of foreign banking organizations.  To date, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and state banking regulators have not issued similar guidance.

Click here to read the Federal Reserve’s Statement on Supervisory Activities.