FDIC Seeks Public Comments on Small-dollar Lending
The Federal Deposit Insurance Corporation (FDIC) announced yesterday that it is seeking information on small-dollar lending, specifically in regards to “consumer demand for small-dollar credit products, the supply of small-dollar credit products currently offered by banks, and what the FDIC can do to better enable banks to offer responsible, prudently underwritten credit products to meet consumer demand.”
FDIC Chairman Jelena McWilliams added that small-dollar credit is not only necessary for consumers but can also benefit consumers when done responsibly. “While it would be optimal if all Americans could meet their financial needs without the need to borrow money or sell something,” said McWilliams, “studies have shown that unfortunately that is not the reality for many Americans. Consumers benefit when small-dollar credit products are available from banks. I encourage the public to use the RFI process to tell us how to ensure that consumers can obtain small dollar credit from banking institutions in a responsible manner.”
The FDIC’s request for comments follows a May bulletin by the Office of the Comptroller of the Currency (OCC) that encouraged banks to offer short-term, small-dollar installment loans that would be paid back sometime between two and twelve months.
The OCC announcement was notable given how it reversed previous Obama administration policies that discouraged small-dollar, short-term lending over concerns that customers would be unable to repay them.
McWilliams made is clear however that the FDIC was not following the footsteps of the OCC and rescinding earlier policies. “If I wanted to just . . . rescind the guidance, I could have done that” once she assumed office earlier this summer, said McWilliams. “What I’m trying to do is make an informed decision here. And that decision is best made if we involve the public and get comments from both the banks and the consumer groups, and the consumers themselves.”
The deadline for submitting comments is 60 days after the notice is published in the Federal Register. Those interested in submitting comments may do so here.