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Financial Services Law Insights and Observations

California Department of Business Oversight issues guidance to financial institutions

State Issues Covid-19 California DBO

State Issues

On March 22, the California Department of Business Oversight (DBO) issued guidance to financial institutions whose customers may be suffering from loss of income or other financial hardship as a result of the Covid-19 pandemic. As directed by Governor Newsom’s Executive Order N-28-20 (previously discussed here), the DBO encourages financial institutions to adopt the following practices, among others, during the state of emergency:

  • Waiving certain fees (e.g., ATM fees, overdraft fees, late payment fees, early withdrawal penalties)
  • Increasing ATM daily cash withdrawal limits;
  • Easing restrictions on cashing out-of-state and non-customer checks;
  • Increasing credit card limits for creditworthy borrowers; and
  • Offering payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by Covid-19-related disruptions.

The guidance provides that prudent efforts to modify the terms on existing loans for affected customers will not be subject to examiner criticism. The guidance provides additional insight on financial condition review, supervisory response, and regulatory relief, regulatory reporting requirements, alternative service options for customers, and the permissibility of holding certain meetings (e.g., annual shareholder meetings, board of director meetings) via videoconference or teleconference.

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