CBA: Banks Can Offer Responsible Short-Term Credit Options

April 29, 2019

CBA: Banks Can Offer Responsible Short-Term Credit Options


WASHINGTON – Consumer Bankers Association President and CEO Richard Hunt today wrote House Financial Services Consumer Protection and Financial Institutions Subcommittee Chair Gregory Meeks (D-N.Y.) and Ranking Member Blaine Luetkemeyer (R-Mo.) on the important role banks can play in helping Americans in need of emergency funds. The Federal

Reserve has stated nearly half of American adults cannot cover an unexpected expense of $400.


“Millions of Americans live paycheck to paycheck, leaving consumers with less cushion for emergencies, strained credit scores, and fewer credit options,” Hunt wrote. “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. As Congress examines the impact the proposed changes could have on consumers, CBA stands ready to provide insight and analysis on how the banking industry could offer a safe and well-regulated short-term bank product designed to help consumers and enhance their financial stability.”


A full copy of the letter is available here.


In 2013, the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) issued overly restrictive guidance on small-dollar bank loans, 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.


Hunt noted this shift pushed many banks out of the small-dollar lending space, leaving consumers little option aside from payday lenders or pawnshops.


The OCC recently rescinded its guidance and the FDIC is has initiated a request for information on its guidance. Likewise, the Consumer Financial Protection Bureau issued a proposed rule to revise its controversial November 2017 small-dollar loan rule.




About the Consumer Bankers Association:

The Consumer Bankers Association represents America’s leading retail banks. We promote policies to create a stronger industry and economy. Established in 1919, CBA’s corporate member institutions account for 1.7 million jobs in America, extend roughly $4 trillion in consumer loans and provide $275 billion in small business loans annually. Follow us on Twitter @consumerbankers.