Washington, DC — Today, the Bank Policy Institute submitted a comment letter to the Federal Deposit Insurance Corporation (FDIC) on its request for information seeking input regarding small-dollar credit products. In order to encourage and enable more banks to provide small-dollar credit products, BPI’s letter suggests that any proposed guidance by the FDIC should consider streamlining its supervisory expectations for banks offering such products and engaging in regulatory coordination with other agencies to ensure a consistent regulatory framework for banks that operate in the market.
“In times of emergency or sudden economic strain, small-dollar loans provide individuals and families a lifeline that can help keep their finances afloat,” said Naeha Prakash Senior Vice President and Associate General Counsel for Consumer Regulatory Affairs at the Bank Policy Institute. “Given the importance of these loans and banks’ extensive experience in offering and underwriting them, it is important that the FDIC continue to work with the banking industry to encourage these types of products and services.”
BPI’s letter sets forth and discusses three key principles it believes should guide the FDIC in addressing the small-dollar lending activities of its supervised banks. First, any regulatory requirements or guidance should serve the broader goal of encouraging responsible, innovative lending by banks to their customers by streamlining, rather than adding to, existing supervisory expectations for such products and allowing for increased regulatory coordination. Second, any guidance for small-dollar credit practices primarily should focus on existing risk management or other internal safety and soundness standards for lending and banks’ own internal systems and practices for meeting them, rather than creating a separate distinct and incremental set of supervisory expectations applicable only to small-dollar lending. Third, any additional regulatory requirements or expectations for small-dollar lending by banks should avoid imposing unnecessary burdens that would limit banks’ ability to provide small-dollar credit products, and thus customers’ ability to obtain such products.
About the Bank Policy Institute. The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
Follow us on Twitter @BankPolicy and www.bpi.com and subscribe to our BPInsights weekly newsletter (at the bottom of our homepage), which summarizes our latest research, comment letters, and blog posts, and links to notable developments of the week.