Flood Answers...or More Questions? It's Your Time to Speak Up!
By David Dickinson
The FFIEC released a Proposed Flood FAQ's last Friday. This one is a little different than most proposals. Let me explain, but first a little background information. I don't need to tell you the flood regulations are thin. There isn't a lot of guidance. The problem stems back to Congress when they first established these laws. They gave FEMA the regulatory authority, so no regulation has ever been written for banks. Each regulatory agency (OCC, FDIC, FRB, etc.) has written their own interpretive section, but there isn't much to it.
In 1997, the FFIEC issued a list of Frequently Asked Questions. Then FEMA began to release guidance through a booklet entitled the Mandatory Purchase of Flood Insurance Guidelines. These Guidelines are not legally your regulatory marching instructions, but your regulators often think they are and expect you to follow them. The '97 FAQ's all but faded from memory once FEMA's Guidelines were published (many times I've had to remind examiners what their own FAQ's state).
So what's the problem? The Flood requirements (or should I say "your bank's compliance with these requirements"?) have seen tons of regulatory scrutiny in the past few years -especially since the hurricanes of 2004 and 2005. Lenders have more questions then regulators have answers. Hence a need for more guidance.
Here's the solutions - or at least an attempt:
- 1. FEMA revised their Guidelines in August 2007. Remember, these aren't technically, regulatory requirements, but you'd better have good reasons for not following these "suggestions".
- 2. The FFIEC is in the process of updating their FAQ's. That's right - in the process - and that's the focus of this blog.
The FAQ's released are "proposed'. I've never seen this either, but I admire the process. The regulators want to answer your questions. I believe the answers already provided will "stick", but the regulators want to hear from you. Let them know what you don't understand, what still needs to be addressed and clarified and what you disagree with. You aren't' going to change the law, but you have input on what you don't understand.
Let me emphasize that last comment: This is NOT a platform to complain about the law or the regulatory requirements. This IS your platform to ask for clarification, guidance and details that you need to implement the existing rules.
Jerod Moyer and I will be conducting a webinar for Bankers Online on the FEMA Guidelines and FFIEC FAQ's on April 30th. I encourage you to read the FAQ's 
and/or attend the webinar and then WRITE YOUR REGULATOR.
Let me make this even easier by providing the email addresses for each regulatory agency:
FDIC: Comments@FDIC.gov Include the RIN number (3064-ZA00) in the subject line of the message.
FRB: regs.comments@federalreserve.gov Include docket number (OP-1311) in the subject line of the message.
NCUA: regcomments@ncua.gov Include ‘‘[Your name] Comments on Flood Insurance, Interagency Questions & Answers'' in the e-mail subject line.
OCC: regs.comments@occ.treas.gov
OTS: regs.comments@ots.treas.gov Please include ID OTS-2008-0001 in the subject line of the message and include your name and telephone number in the message.
I know you already have more to do than time to do it in (who doesn't), but you don't get very many chances to make your life easier when it comes to regulatory issues. I encourage you to make this one a priority.