How Banks Can Help Disaster Victims



Major crises may occur at any time. Some disasters are predicted, others not. Financial institutions are vital in helping consumers and communities recover after disasters such as Hurricanes Sandy, Harvey, Maria, and Michael and the 2019 Midwest floods. Because they directly impact workers, customers, and communities, they may deploy resources to relieve pain.

The Federal Reserve released guidance to its supervised institutions1 to support their customers and communities amid the COVID-19 situation. These supervisory practices, which have been in existence for many years, are still applicable in the current financial crisis. Financial institutions may help their impacted consumers recover and stabilize by following this advice. Here, we will address how financial institutions may help their consumers before and after calamities.

It addressed crises.

SR 13-6/CA 13-3 does not address all emergencies. The Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5101. (the act).

A significant catastrophe is:

The President deems warrants substantial disaster assistance under this Act.

Specifically, the statute specifies that federal assistance is needed to help save lives, protect property, and public health in any part of the country.

The President proclaimed a national emergency on March 13, 2020, due to the COVID-19 epidemic. FEMA provides a searchable list of all-natural disasters and emergency designations.

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Concerned Customers in a Crisis

The board and senior management establish business continuity plans (BCP). Informed by the institution’s needs, BCPs handle crises. An efficient pandemic contingency plan anticipates how to serve clients when access to institution facilities is limited. If onsite services are unavailable, utilize online banking, telephone banking, ATMs, and contact support services.

Institutions can assist customers in disaster planning. Flooding is the most common natural disaster. Recent articles on common flood insurance breaches and risk reduction measures have been published. They were securing the mortgage and commercial lending customers with a solid flood insurance compliance program. Borrowers who get loans secured by SFHA property must have adequate flood insurance. The nationally mandatory flood insurance has limits. Borrowers who insure their houses for more than the maximum permitted by law may want to consider private flood insurance.

By educating customers and companies, banks can help them plan for and recover from a crisis. Create crisis preparations, recover deposited funds, communicate with institution workers during an emergency, and detect natural disaster scams. 

Crisis Intervention and Recovery

Large floods may prioritize staff communications and infrastructure. Delays in customer service and community communications, and people and infrastructure are common during government emergencies like COVID-19. Upper management may rely on its BCP to promptly handle issues to service customers effectively. Dial institutions may explore additional crisis-related operations and those listed in SR 13-6/CA 13-3 and CA 20-4. Clients have quick access to their money, eliminating income disruptions during and after a crisis. Helping debtors manage their debt obligations may help the financial institution collect. THESE ACTIVITIES SHOULD BE UNDERTAKEN SAFELY AND SECURELY under SR 13-6/CA 13-3 and CA 20-4.

Increased ATM withdrawal limits, waived overdraft fees, and time deposit penalties

lowering limitations on non-customer checks;

Nondocumentary (public databases, credit reporting agencies, and links with other financial institutions) and documentary verification procedures for identifying clients and noncustomers completing transactions

  • Enhancing client credit card limitations
  • Encouraging customers to take up short-term unsecured loans
  • Providing alternatives to customers owing to branch closures;
  • Allowing borrowers to postpone, skip, or extend payments to avoid COVID-19 delinquencies and poor credit agency reporting;
  • Convenient single payment loans for individuals and small companies.

Recent Federal Reserve and interagency comments suggest banks should provide small-dollar consumer and business loans with flexible payback arrangements. These approaches may benefit customers long-term. Financial institutions who work well with borrowers will not be criticized, said the agencies. 

Each agency has made suggestions on how financial institutions might comply with federal consumer protection rules and regulations without harming consumers. This issue offers a list of Federal Reserve resources for institutions. Regulation B’s loan application and valuation constraints are addressed in the Bureau’s current and previous supervisory statements. Some of these rules are included in the Real Estate Settlement Procedures Act, while others are in the Fair Credit Reporting Act. 

During and after a disaster, customers will be notified of temporary relocations and service availability—for example, understanding mobile banking or contacting institution workers regarding outstanding loan applications. Affected financial institutions should inform the Federal Reserve Bank of any temporary adjustments due to power, telecommunications, personnel, or other concerns.

Ongoing Crisis Recovery Strategies

After a major disaster or emergency, financial institutions can help customers and communities recover financially and rebuild infrastructure. A financial institution may support long-term rehabilitation efforts by:

Waiving late penalties for credit card and other loan amounts; Offering payment concessions and appropriate loan restructuring solutions.

For example, financial institutions may help customers and communities monitor potential disaster-related scams and fraud. As a result, customers and communities most in need of assistance lose funds due to relief scams (i.e., identity theft and phony contractors).

During and after a natural disaster, consumer complaints may assist banks in assessing customer and community satisfaction. Consumer complaints may reveal service gaps and resource redistribution.


Major tragedies and calamities damage financial businesses and their customers, but they pass. During and after a crisis, financial institutions may help consumers and communities. This article discussed how Federal Reserve-supervised institutions might assist customers and communities hit by disasters. To prepare for natural catastrophes, institutions may help customers and communities by ensuring borrowers have enough flood insurance. Financial institutions may utilize these tactics to assist customers in local and regional crises, not only those proclaimed by the federal government. Questions about catastrophe preparedness and response should go to essential regulators.


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