Supply, demand for ‘small-dollar lending’ topics of FDIC information request

Consumer demand for small dollar lending products at federally insured banks and savings associations is one of the topics being sought for comment in a “request for information” (RFI) from the public issued by the Federal Deposit Insurance Corp. (FDIC) Wednesday.

The agency said it is also looking for public comment on 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.”

In a release, FDIC Chairman Jelena McWilliams said her agency issued the RFI to find out  how to ensure that consumers can obtain small-dollar credit from banks and thrifts “in a responsible manner.”

“While it would be optimal if all Americans could meet their financial needs without the need to borrow money or sell something,” McWilliams said in the release, “studies have shown that unfortunately that is not the reality for many Americans. Consumers benefit when small-dollar credit products are available from banks.”

The Bureau of Consumer Financial Protection (BCFP, formerly known as the CFPB) issued a rule last year on small-dollar lending (also known as payday lending). However, early this year, the agency indicated plans to “reconsider” the rule; last month, the agency said that proposed, “reconsidered” rule would be issued in January.

In May, the OCC issued a bulletin encouraging banks and savings institutions to provide consumers short-term, small-dollar installment loans – and offered principles and polices to help them do so without running afoul of the bureau’s payday lending rule. (The Treasury, in July, recommended that the bureau rescind its payday rule and that other banking regulators take steps “to encourage sustainable and responsible short-term, small-dollar installment lending by banks.”)

The FDIC said it will take comments for 60 days on its RFI after its publication in the Federal Register.

Request for Information on Small-Dollar Lending

 

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