Bank regulators are open for business, but not business as usual
By Brendan Pedersen, Hannah Lang and Kate Berry
WASHINGTON — As everyday life grinds to a halt in response to the coronavirus outbreak, add the bank regulatory agencies to entities upending their normal routines.
At least one agency, the Consumer Financial Protection Bureau, has reported that an employee tested positive for COVID-19. Although the federal government remained open Monday, federal bank regulators communicated telework policies and told examiners to conduct reviews remotely whenever possible, following social distancing recommendations from public health experts.
Meanwhile, observers are bracing for potential slowdowns in the rule-writing process for a variety of policies still pending, ranging from an interagency effort to modernize the Community Reinvestment Act to the Consumer Financial Protection Bureau's revamp of its payday lending rule. Agency officials, however, stress that there are no signs of any rulemaking delays.
"The whole rulemaking process has to be in chaos right now. It's difficult to predict what the impact will be, but bottom line — things are going to slow down," said Gilbert Schwartz, a partner at Schwartz & Ballen LLP. "The easiest way to handle this would be extending comment periods for these ongoing proposals."
Read more: Complete coverage of the coronavirus impact
Still, regulatory business has not shut down completely. As of Monday afternoon, the agencies were still open. A spokesperson for the Federal Deposit Insurance Corp. said the agency will still hold a meeting Tuesday of the FDIC board of directors to consider a proposal on regulating industrial loan companies, although the meeting will not be open to the public.
Here is a rundown of how the virus response is affecting the bank regulators.
The CFPB said Monday in an email to staff that a contractor who works at its headquarters in Washington D.C. has tested positive for COVID-19.
The email, from CFPB Director Kathy Kraninger, also notified staff that three other employees of the bureau have exhibited symptoms of COVID-19 and are being tested.
The bureau is not disclosing the name of the individual or the contracting firm but is “developing a list of individuals who were potentially in close contact in order to inform these individuals,” Kraninger said in the staff email.
Last week, Kraninger sent an earlier email to staff announcing a mandatory telework policy for all employees at its headquarters and its New York regional office. All CFPB employees were ordered to work from home this week while the office buildings are cleaned.
“We have received reports of potential exposure to COVID-19 from individuals who work or have been in these locations,” Kraninger said in the earlier email. “No staff is permitted to work at either location.”
All examination activity of CFPB-supervised institutions will be conducted off-site “from examiners’ home duty stations” for two weeks from March 16 through March 26, Kraninger wrote. Official travel is not permitted at this time, she said.
The FDIC has mandated teleworking for the vast majority of its staff through the end of March. Only personnel required to be physically in the office have been allowed inside the agency’s headquarters or regional offices. Even those employees have been encouraged to return home after completing work that requires a physical presence.
The agency has also increased the number of bank examinations that are being conducted off-site.
“The FDIC is operational,” the FDIC spokesperson said. “We’re continuing to execute our mission despite the challenges presented by COVID-19.”
For the agency's board meeting on Tuesday, only the directors themselves and the staff making presentations will be present. The meeting will be webcast live.
Although examiners still have the option to work on site, the FDIC is strongly encouraging employees to conduct their examinations from afar when they can. On rulemaking, the FDIC does not expect any delays for the time being, the spokesperson said.
The Office of the Comptroller of the Currency said it was providing flexibility for its work force to telework “as possible” for the foreseeable future, a spokesperson said.
“The agency is open for business,” the OCC spokesperson said.
As of Monday, the OCC had instructed managers and supervisors to allow for use of telework for employees not required to be in the office or on-site. For essential and emergency-level personnel, the agency is rotating workers in and out of the office on a two-week interval “so as not to cross-contaminate,” the spokesperson said.
The OCC has also suspended international travel for employees and is limiting domestic travel to essential trips only
In a press conference Sunday, Federal Reserve Chairman Jerome Powell said he had not been tested for the coronavirus, noting that he feels “very well” so there would be no reason for him to be tested.
The Fed is “trying to model good behavior,” he added, which includes a lot of teleworking and no large, crowded meetings.
“We’re trying to observe all the things that the professionals tell us to do,” Powell said. “I do expect to do some teleworking because I want to model that it’s okay for other people to do so, in fact, it’s important for them to do so, so I will do that.”
The Fed’s bank examiners have also started teleworking.
“As a precaution, examiners for the largest banks are now working fully remotely, consistent with existing arrangements,” a Fed spokesperson said. “This change will have no effect on the Fed’s ability to monitor and supervise those institutions.”
Effective Monday, all employees of the Federal Housing Finance Agency and contractors are required to work from home through the close of business Monday, March 30, according to an FHFA spokesperson.
The agency’s Office of the Chief Operating Officer is granting exceptions for certain people to work onsite only if it determines that their work cannot be performed remotely.