Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19
The Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB) (collectively, “the agencies”) recognize the potential for the Coronavirus Disease (referred to as COVID-19) to adversely affect the customers and operations of banks, savings associations and credit unions (collectively, “financial institutions”).
On March 9, 2020, the federal financial institution regulatory agencies and state bank regulators issued a statement to encourage financial institutions to meet the financial services needs of their customers and members in areas affected by COVID-19. Additionally, on March 19, 2020, the Federal Reserve, FDIC, and OCC issued a joint statement on Community Reinvestment Act (CRA) consideration for activities in response to COVID-19, stating that for CRA purposes, the agencies will favorably consider retail banking and lending activities that meet the needs of affected low- and moderate-income individuals, small businesses, and small farms, consistent with safe and sound banking practices and applicable laws, including consumer protection laws. This statement noted such activities could include offering short-term, unsecured credit products for creditworthy borrowers.
The agencies are issuing this statement to specifically encourage financial institutions to offer responsible small-dollar loans to both consumers and small businesses. The agencies recognize the important role that responsibly offered small-dollar loans can play in helping customers meet their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income short-falls during periods of economic stress or disaster recoveries.