Regulators urge banks to make loans to Gulf oil spill victims

Regulators urge banks to loan to Gulf victims

WASHINGTON — Regulators urged banks to make loans to creditworthy people and businesses whose livelihoods have been hurt by the Gulf Oil spill.

In a joint statement issued Wednesday, the regulators said that banks should make an effort to work with customers to help them get over any financial humps. Doing so, will help the local economies heal and strengthen the long-term relationships between the banks and their customers.

“Banks can help customers recover financially and be better positioned to honor their obligations,” the regulators said. “In the affected areas, these efforts can also contribute to the health of local communities.”

The agencies making the plea include federal regulators, such as the Federal Reserve and the Federal Deposit Insurance Corp., along with the Conference of State Bank Supervisors, which oversees banks at the local level.

Trying to spur lending to the Gulf and elsewhere is a delicate matter for banking regulators. Even as they want banks to provide more loans to people and businesses, regulators want banks to do so prudently. Lax lending standards figured prominently into the financial debacle, which reached a crisis point in the fall of 2008.

Millions of gallons of oil have spewed into the Gulf after the Deepwater Horizon offshore drilling platform exploded on April 20, killing 11 workers.

The BP oil spill has hammered the fishing and tourism industries along the Gulf of Mexico. But it appears the economic damage to the rest of the nation will be limited, analysts say.