Shutdown highlighted need for bank-backed small-dollar loans


Richard Hunt
February 11, 2019


  • A tremendous amount of attention rightfully was given to the financial hardships furloughed employees faced during the month-long partial shutdown of the federal government. I am proud to say banks proactively stepped up to the plate. But that did not stop the letters from Congress inquiring how financial institutions were helping furloughed workers — despite efforts being well underway long before politicians weighed in.


  • There are millions of Americans, however, who needed short-term financial assistance before the shutdown began and who continue to need it now that the shutdown has ended. Oddly, members of Congress did not say a word when regulatory guidance issued in 2013 effectively stopped banks from helping the nearly half of American adults who cannot cover an emergency expense of $400, according to the Federal Reserve.


  • Banks are in a unique position to help millions of Americans in need of small-dollar credit. Banks are thoroughly supervised, amply regulated and well capitalized institutions in which U.S. consumers will find fair pricing coupled with established consumer protections. However, overly restrictive federal guidance and rules pushed consumers into more unfavorable alternatives with higher costs and less oversight.