The federal banking agencies on Wednesday issued an Interagency Statement on Meeting the Needs of Creditworthy Borrowers to all Federal Deposit Insurance Corporation (FDIC)-supervised institutions. The statement encourages financial institutions to support the lending needs of creditworthy borrowers, strengthen capital, engage in loss-mitigation strategies and foreclosure-prevention strategies with mortgage borrowers, and assess the incentive implications of compensation policies. Although the statement is designed to motivate lenders to, among other things, start lending in an effort to mitigate the effects of a recessionary environment, the statement also makes it clear that such lending must be done in a "prudent" manner, lending only to "creditworthy borrowers." The statement also encourages lenders to "work with borrowers to preserve homeownership and avoid preventable foreclosures, adjust dividend policies to preserve capital and lending capacity and employ compensation structures that encourage prudent lending."
Presumably in an effort to further motivate institutions under its jurisdiction, the FDIC also stated that "State nonmember institutions' adherence to these expectations will be reflected in examination ratings the FDIC assigns for purposes of assessing safety and soundness, their compliance with laws and regulations, and their performance in meeting the requirements of the Community Reinvestment Act (CRA)." While the Statement itself stated that all institutions "are expected to adhere to the principles in this statement," the other banking agencies did not echo the FDIC statement about examination ratings in their respective press releases. The FDIC is the primary federal regulator of state-chartered banks that are not members of the Federal Reserve System.
It should also be noted that on November 13, the FDIC proposed a new loss sharing plan to promote affordable loan modifications.