Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19

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Article Highlights:

On March 26 2020, the Board of Governors of the Federal Reserve System (FRB), the Consumer Financial Protection Bureau (CFPB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC, jointly Agencies) issued a joint statement encouraging financial institutions to offer responsible small-dollar loans to consumers and small businesses affected by COVID-19.

Recognizing that responsible small-dollar loans can play a significant role in assisting both consumers and small businesses to meet temporary cash flow needs, unexpected expenses, or income shortfalls during the COVID-19 pandemic, the Agencies encourage the institutions they supervise to use existing or modified products, such as lines of credit, installment loans, or appropriately structured single-payment loans to meet customer needs. The Agencies also encourage banks to consider prudent workout strategies to assist borrowers experiencing unexpected financial difficulties to help enable the borrower to repay the principal of the loan while mitigating the need to re-borrow. All credit products should be offered in a fair, safe, and sound manner that complies with all applicable legal requirements, including consumer protection requirements.

For more information on other regulatory statements on working with customers affected by COVID-19, please see the following links: