A group of U.S. financial regulators on Tuesday urged banks to keep credit flowing to businesses hurt by a historic drought that has severely damaged crops in the country's Midwest region.
Banks should consider expediting lending decisions when possible, extending or restructuring borrowers obligations and easing credit terms, the Federal Financial Institutions Examination Council (FFEIC), composed of the Federal Reserve, the Federal Deposit Insurance Corporation and other top bank regulators, said in a joint statement.
"The FFIEC is strongly encouraging financial institutions in areas affected by drought conditions to work constructively with borrowers," the group said in a statement.
"The effects of natural disasters on the agricultural sector are often temporary, and prudent loan modification efforts can help stabilize borrowers," the FFIEC added.
A lack of significant rain so far this fall has U.S. farmers and government agriculture officials worried that the worst drought in 56 years, which devastated this year's U.S. corn and soybean production, will continue and hurt next year's crops.