Staff Reporter

U.S. banking regulators announced their support for banks making “prudent efforts” to modify loan terms for borrowers impacted by the California wildfires. They also pledged regulatory assistance to affected institutions.

In a joint statement released on Tuesday, federal banking regulators, along with the California Department of Financial Protection, called on banks to consider adjusting loan terms for those harmed by the wildfires. They emphasized their commitment to work with banks to navigate regulatory requirements during this crisis.

JPMorgan’s forbearance program will initially provide relief for three months, with the option to extend in three-month increments for up to 12 months. There are also possibilities for extending the relief period further, depending on the investor or insurer.

Borrowers often seek assistance from banks to help cover rebuilding costs. However, the financial strain from unpaid loans can lead lenders to withdraw from markets vulnerable to natural disasters.

“The Los Angeles wildfires highlight the urgent need for financial institutions to focus on climate risk management,” said Laurent Birade, banking industry practice lead at Moody’s.

“Banks with significant exposure to affected sectors must understand, identify, measure, and manage their climate risk through scenario analysis to ensure more resilient and sustainable financial operations.”