FDIC Requests Comments On Incentivizing Banks To Offer Small-Dollar Credit Products

Author:Mr Steven Lofchie
Profession:Cadwalader, Wickersham & Taft LLP

The FDIC requested feedback from the public on ways in which it could incentivize FDIC-supervised institutions to offer small-dollar credit products that are (i) "responsible, prudently underwritten" and (ii) economically viable for the credit needs of bank customers.

The FDIC stated that small-dollar credit products can allow banks to address consumers' credit needs, such as cashflow imbalances, unexpected expenses and income volatility. Based on research by the FDIC, four in ten U.S. adults in 2017 would have to borrow or sell something in order to pay a hypothetical $400 expense. Credit products can help to alleviate these concerns.

The FDIC requested feedback on, among other things:

consumer demand for small-dollar credit products; benefits and risks for banks offering small-dollar credit products; regulatory, supervisory and operational challenges; and...

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