The Consumer Bankers Association (CBA) is touting the potential of financial institutions to aid Americans in need of emergency funds.
“Millions of Americans live paycheck to paycheck, leaving consumers with less cushion for emergencies, strained credit scores, and fewer credit option,” CBA president and CEO Richard Hunt wrote in correspondence to House Financial Services Consumer Protection and Financial Institutions Subcommittee Chair Gregory Meeks (D-NY) and Ranking Member Blaine Luetkemeyer (R-MO). “The need for access to affordable, short-term liquidity products has become more important than ever. CBA is encouraged by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation’s recent actions related to DAP and the CFPB’s decision to revise the small dollar rule as these actions will help to foster a vibrant small-dollar loan market for consumers in need.”
Six years ago the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued guidance on small-dollar bank loans, officials said, often known as deposit advance products (DAP), which served as a safe and affordable alternative to payday loans.
The guidance recommended the use of underwriting that is more appropriately applied to a much larger credit product, such as a mortgage loan and placed other restrictions on the products.
To that end, officials said the OCC recently rescinded its guidance, the FDIC has initiated a request for information on its guidance, and the Consumer Financial Protection Bureau issued a proposed rule to revise its controversial November 2017 small-dollar loan rule.