[Federal Register Volume 72, Number 109 (Thursday, June 7, 2007)]
[Notices]
[Pages 31579-31581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-11005]


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FEDERAL DEPOSIT INSURANCE CORPORATION


Agency Information Collection Activities: Proposed Information 
Collection; Comment Request

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Notice and request for comment.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995, an 
agency may not conduct or sponsor, and the respondent is not required 
to respond to, an information collection unless it displays a currently 
valid Office of Management and Budget (OMB) control number. The FDIC is 
contemplating initiating a two-year pilot program relating to small-
dollar lending by insured depository institutions. Institutions meeting 
threshold eligibility requirements may volunteer to participate in the 
pilot, and the collection at this first stage would provide certain 
basic information as to the institution and its current or proposed 
small-dollar lending program. Participating institutions would 
thereafter provide certain information to the FDIC about their ongoing 
experience with their small-dollar lending program. The collection at 
this second stage would provide information on the most effective and 
replicable business practices to incorporate affordable small-dollar 
loans into effective business models to reach out to underserved 
communities and to

[[Page 31580]]

develop new customers for mainstream banking services, whether 
consumers who take advantage of such loans migrate into other banking 
products, and whether a savings component provides a steady increase in 
savings.

DATES: Comments must be submitted on or before August 6, 2007.

ADDRESSES: You may submit comments by any of the following methods:
     Agency Web Site: http://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency Web 
Site.
     E-mail: [email protected].
     Mail: Leneta Gregorie, Legal Division, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7 a.m. and 5 p.m. (EST).
    All comments should refer to ``Pilot Study of Small Dollar Loan 
Programs.'' Copies of comments may also be submitted to the OMB desk 
officer for the FDIC, Office of Information and Regulatory Affairs, 
Office of Management and Budget, New Executive Office Building, 
Washington, DC 20503.
    Public Inspection: All comments received will be posted without 
change to http://www.fdic.gov/regulations/laws/federal including any 
personal information provided. Comments may be inspected and 
photocopied in the FDIC Public Information Center, 3501 North Fairfax 
Drive, Room E-1002, Arlington, VA 22226, between 9 a.m. and 5 p.m. 
(EST) on business days. Paper copies of public comments may be ordered 
from the Public Information Center by telephone at (877) 275-3342 or 
(703) 562-2200.

FOR FURTHER INFORMATION CONTACT: Interested members of the public may 
obtain additional information about the collection, including a copy of 
the proposed collection and related instructions, without charge, by 
contacting Leneta Gregorie at the address identified above or by 
calling 202-898-3719.

SUPPLEMENTARY INFORMATION:

Proposal To Seek OMB Approval for the Following New Collection of 
Information

    Title: Pilot Study of Small-Dollar Loan Programs.
    OMB Number: New collection (3064-xxxx).
    Frequency of Response: Pilot study application--one-time; Program 
evaluation reports--quarterly for two years.
    Affected Public: Insured depository institutions that apply for and 
are accepted to participate in the pilot study.
    Estimated Number of Respondents: Pilot study application--40; 
Program evaluation reports--20 to 40.
    Estimated time per response: Pilot study application: Estimated 
average of 2 hours per respondent. Program evaluation reports: 
Estimated average of 5 hours per respondent per quarter during study.
    Estimated Total Annual Burden:
    Pilot study application: 40 respondents times 2 hours per 
respondent = 80 hours.
    Program evaluation reports: 20 to 40 respondents times 5 hours per 
respondent times 4 (quarterly) collections = 400 to 800 aggregate 
hours.
    Total burden = 80 + 800 = 880 hours.

General Description of Collection

    In recognition of the huge demand for small-dollar, unsecured 
loans, as evidenced by the proliferation around the country of payday 
lenders, the FDIC, on December 4, 2006, proposed and sought comment on 
guidelines for such products (http://www.fdic.gov/news/news/press/2006/pr06107.html). The proposed guidelines addressed several aspects of 
product development, including affordability and streamlined 
underwriting. Based on the comments received, the FDIC is in the 
process of revising the guidelines for issuance in final form. The 
FDIC's goal in issuing the guidance is to encourage state nonmember 
banks to offer small-dollar, unsecured loans in a safe and sound manner 
that is also cost-effective and responsive to customer needs.
    To further encourage the development by insured depository 
institutions of small-dollar credit programs, the FDIC is contemplating 
conducting a pilot study to identify and evaluate the key components of 
small-dollar loan programs, with the goal of identifying the most 
effective and replicable business plans for bankers, determining the 
degree to which customers of such programs migrate into other banking 
products, assessing the extent to which a savings component results in 
increased savings, and identifying program features which can be deemed 
``best practices.'' Programs selected for the pilot may be either 
already in existence at an insured institution or developed 
specifically for participation in the study. The pilot study will 
require collection of data from applicant institutions to determine 
eligibility as well as quarterly collection (for two years) of data 
from participating institutions, to the extent such data are not 
currently included in the Call Reports or other standard regulatory 
reports, to evaluate program success.
    Pilot Study Application: Volunteers for the pilot program will be 
screened to ensure that they meet certain basic eligibility 
requirements. A volunteer will likely be asked to demonstrate, by 
certification or otherwise, that it meets the following threshold 
requirements: A composite ``1'' or ``2'' rating on its most recent 
Safety and Soundness examination and a Management rating of ``1'' or 
``2''; satisfactory policies and procedures in all areas, including 
lending, audits, aggregate risk, internal controls, liquidity, interest 
rate risk, compliance, BSA/AML; a composite ``1'' or ``2'' rating on 
its most recent Compliance examination; at least a ``Satisfactory'' 
rating on its most recent Community Reinvestment Act (CRA) evaluation; 
the fact that it is not currently subject to a formal or informal 
enforcement action or the subject of an investigation or inquiry.
    Each volunteer interested in participating in the study will also 
be asked to provide the following (or similar) information:
     Whether it already offers small-dollar loans and, if so, 
the terms of such loans;
     If it proposes to initiate a small-dollar loan program, 
the proposed structure of the program;
     The current or proposed size of the program;
     How it proposes to market the program;
     How it envisions the small-dollar loan application 
process;
     What it proposes as underwriting criteria; and
     Proposed interest rates and fees.
    Key features of a preferred small-dollar lending program might 
include loan amounts of up to $1,000; amortization periods longer than 
a single pay cycle and up to 36 months for closed-end credit, or 
minimum payments which reduce principal (i.e., do not result in 
negative amortization) for open-end credit; annual percentage rates 
(APR) below 36 percent; no prepayment penalties; origination and/or 
maintenance fees limited to the amount necessary to cover actual costs; 
and a savings component.
    Descriptions provided by eligible volunteers will be reviewed by a 
FDIC selection panel. To provide more meaningful information about the 
pilot's success, the institutions selected to participate will likely 
consist of various sized institutions and in widely dispersed 
geographic locations.
    Program evaluation reports: A volunteer must agree to the 
monitoring

[[Page 31581]]

and data collection aspects of the pilot program. For this purpose, the 
FDIC anticipates that the following (or similar) information will be 
collected from participating institutions on a quarterly basis for two 
years:
    1. Information about the loans in the Program
    a. The total number and total dollar amount of loans.
    b. Average loan term and average dollar size of loans.
    c. Average interest rates charged, average fees levied, and average 
calculations of APR (as required by the Truth-in-Lending Act).
    d. Aggregate delinquency, charge off, and workout refinancing data.
    2. Information about the business value of the Program
    a. Profitability and/or break even data for the overall Program.
    b. Profitability of the overall customer relationship (especially 
if the customer migrated into other products)
    c. Information regarding whether customers of the Program migrated 
to other bank products.
    3. Information about the benefit to consumers
    a. The total number and total dollar amount of linked savings 
accounts opened as part of the Program.
    b. Information as to duration and withdrawal rates of the linked 
savings accounts.
    c. Information regarding whether customers of the Program continued 
to use payday loans or other high-cost debt products.
    The preferred method for collecting these data is electronic 
submission through the existing FDICconnect data interface system to 
minimize burden on respondents, with participating institutions 
submitting the data within 40 calendar days of the end of each quarter. 
The study will conform to privacy rules and will not request any 
information that could be used to identify individual bank customers, 
such as name, address, or account number. All data from participating 
insured institutions will remain confidential. It is the intent of the 
FDIC to publish only general findings of the study.

Benefits to Institutions Participating in the Pilot

    As indicated above, the study is being conducted on a volunteer 
basis. It is anticipated, however, that institutions participating in 
the study will realize some benefits. A state non-member bank that 
establishes a loan program that provides small, unsecured consumer 
loans that are consistent with the Affordable Small-Dollar Loan 
Guidelines would warrant favorable consideration by the FDIC under the 
CRA as an activity responsive to the credit needs of its community. It 
is anticipated that other institutions will also likely be entitled to 
similar favorable consideration after review by their primary federal 
regulator. Moreover, programs that transition low or moderate income 
borrowers from higher cost loans to lower cost loans are particularly 
responsive to community needs. Consequently, state non-member banks 
offering lower cost alternatives to such borrowers will also be viewed 
by the FDIC as particularly responsive in the CRA examination and 
similarly, other institutions upon review by their primary federal 
regulator.
    Where small-dollar loan products are combined with a low-cost 
savings account, institutions may also qualify for favorable 
consideration for providing community development services. 
Institutions can potentially use the small-dollar loan pilot to tap 
into new markets by expanding relationships with individuals who 
currently may not be fully utilizing the mainstream financial system. 
An intangible benefit that may accrue to institutions participating in 
the small-dollar pilot is the community goodwill that will likely be 
created as a result of offering consumers credit products with 
significant savings over payday loan fees.

Request for Comment

    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the FDIC's functions, 
including whether the information has practical utility; (b) the 
accuracy of the estimates of the burden of the information collection; 
(c) ways to enhance the quality, utility, and clarity of the 
information to be collected; (d) ways to minimize the burden of the 
information collection on respondents, including through the use of 
automated collection techniques or other forms of information 
technology; and (e) estimates of capital or start-up costs, and costs 
of operation, maintenance and purchase of services to provide the 
information.

    Dated at Washington, DC, this 1st day of June, 2007.

    Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
 [FR Doc. E7-11005 Filed 6-6-07; 8:45 am]
BILLING CODE 6714-01-P