Katrina's Wake: Restoring Financial Services
Publication Date: September 2005
Publisher(s): Library of Congress. Congressional Research Service
In the wake of Hurricane Katrina, damage to the financial infrastructure appears to be largely confined to small depository institutions. Directives stemming from the 9/11 attacks require most banking and securities firms to maintain off-site redundancy for significant personnel and daily data backups. The damaged area is sufficiently wide, however, and the possibility of long-term loan delinquency sufficiently high, that greater harm may yet surface. To date, most depository institutions are functioning to some degree and, despite concerns over large withdrawals, regulators say they do not expect any to fail as a result of the damage.
Regulators are working with banks and credit unions to provide considerable relief to customers hard-hit by the storm. Some lenders have announced customer relief programs ranging from waivers of ATM fees and increases in cash electronic withdrawal limits to cessation of foreclosure procedures and automatic forbearance for mortgage payments for the months of September through November.
Congress has been briefed by the major regulators and hearings are scheduled for the House Financial Services Committee on September 14, 2005. In addition, there are some calls for (1) an emergency increase in deposit insurance ceilings to reassure major depositors that their funds are safe, and (2) legislation providing temporary relief from anti-money-laundering and know-your-customer requirements.
This report will be updated to reflect new developments.