[Federal Register Volume 83, Number 224 (Tuesday, November 20, 2018)]
[Notices]
[Pages 58566-58568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25257]
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FEDERAL DEPOSIT INSURANCE CORPORATION
RIN 3064-ZA04
Request for Information on Small-Dollar Lending
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Notice and request for Information.
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SUMMARY: The FDIC is seeking comments and information from interested
parties on small-dollar lending, including steps that can be taken to
encourage FDIC-supervised financial institutions (banks) to offer
small-dollar credit products that are responsive to customers' needs
and that are underwritten and structured prudently and responsibly.
DATES: Comments must be received by January 22, 2019.
ADDRESSES: You may submit comments, identified by RIN 3064-ZA04, by any
of the following methods:
Agency website: https://www.fdic.gov/regulations/laws/federal/. Follow the instructions for submitting comments on the Agency
website.
Email: [email protected]. Include the RIN 3064-ZA04 in the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street NW,
Washington, DC 20429.
Hand Delivery: Comments may be hand-delivered to the guard
station at the rear of the 550 17th Street NW, building (located on F
Street) on business days between 7:00 a.m. and 5:00 p.m.
Public Inspection: All comments received must include the agency
name and RIN for this rulemaking. All comments received will be posted
without change to https://www.fdic.gov/regulations/laws/federal/--
including any personal information provided--for public inspection.
Paper copies of public comments may be ordered from the FDIC Public
Information Center, 3501 North Fairfax Drive, Room E-1002,
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Arlington, VA 22226 by telephone at (877) 275-3342 or (703) 562-2200.
FOR FURTHER INFORMATION CONTACT: Paul Robin, Section Chief, (202) 898-
6818, [email protected].
SUPPLEMENTARY INFORMATION: The FDIC is responsible for maintaining
stability and public confidence in the nation's financial system by
insuring deposits, examining and supervising financial institutions for
safety and soundness and consumer protection, making large and complex
financial institutions resolvable, and managing receiverships. As
discussed further below, the FDIC is soliciting public comments on
issues related to small-dollar lending by banks. Specifically, we are
requesting information on the consumer demand for small-dollar credit
products, the supply of small-dollar credit products currently offered
by banks, and whether there are steps the FDIC could take to better
enable banks to provide such products to consumers to meet demand.
Overview of Request for Information
The Federal Deposit Insurance Corporation (FDIC) is issuing this
request for information (RFI) to seek public input on steps the FDIC
could take to encourage FDIC-supervised institutions to offer
responsible, prudently underwritten small-dollar credit products that
are economically viable and address the credit needs of bank customers.
This effort is consistent with the FDIC's commitment to increase
transparency, improve efficiency, support innovation, and provide
opportunities for public feedback on issues affecting FDIC-supervised
institutions and their customers.
The FDIC recognizes the important role small-dollar credit products
can play, as part of the spectrum of credit and savings products
offered by banks, in helping consumers meet the need for credit for
purposes such as addressing cash-flow imbalances, unexpected expenses,
or income volatility. Recent research from the FDIC indicates that 20
percent of U.S. households reported that their income varied
``somewhat'' or ``a lot'' from month-to-month.\1\ Moreover, according
to research from the Federal Reserve, if faced with a hypothetical $400
expense, 4 in 10 U.S. adults in 2017 would borrow, sell something, or
not be able to pay.\2\
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\1\ ``2017 FDIC National Survey of Unbanked and Underbanked
Households,'' Federal Deposit Insurance Corporation, October 2018.
\2\ ``Report on the Economic Well Being of U.S. Households in
2017,'' Board of Governors of the Federal Reserve System, May 2018.
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Given the unique role banks play in the communities they serve and
the benefits to consumers of having a relationship with an insured
financial institution, banks are well-positioned to address the credit
needs of their customers in a responsible manner. While some banks
currently offer small-dollar credit products, there may be additional
opportunities for banks to address unmet demand for consumer credit in
their communities. For example, research from the FDIC suggests that in
2017, 14.8 million or nearly 13 percent of U.S. households may have had
unmet demand for small-dollar credit from banks. A majority of these
households reported staying current on bills in the prior year.
Although the vast majority (nearly 9 in 10) of these households had a
bank account, fewer than one in three applied for credit from a
bank.\3\ Some of these households may present opportunities for banks
to extend credit in the form of small-dollar loans.
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\3\ ``2017 FDIC National Survey of Unbanked and Underbanked
Households,'' Federal Deposit Insurance Corporation, October 2018.
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Accordingly, the FDIC invites public comments on the full spectrum
of issues related to the role banks can play in offering small-dollar
credit, obstacles--regulatory and non-regulatory--that banks currently
encounter in offering such credit, and whether there are steps the FDIC
could take to enable banks to better serve this market.
Suggested Topics for Commenters
The FDIC encourages comments from all interested members of the
public, including but not limited to insured depository institutions,
other financial institutions or companies, individual depositors and
consumers, consumer groups, trade associations, and other members of
the financial services industry. Please be as specific as possible to
allow the FDIC to evaluate comments more effectively. In particular,
the FDIC requests input on the following more specific topics and
questions:
Consumer Demand
1. To what extent is there an unmet consumer demand for small-
dollar credit products offered by banks?
2. To what extent do banks currently offer small-dollar credit
products to meet consumer demand?
3. To what extent and in what ways do entities outside the banking
sector currently satisfy the consumer demand for small-dollar credit
products?
4. What data, information, or other factors should the FDIC
consider in assessing the consumer demand for small-dollar credit
products?
Benefits and Risks
5. What are the potential benefits and risks to banks associated
with offering responsible, prudently underwritten small-dollar credit
products?
6. What are the potential benefits and risks to consumers
associated with bank-offered small-dollar credit products?
7. What are the key ways that banks offering small-dollar loan
products should manage or mitigate risks for banks and risks for
consumers?
8. What are the potential benefits and risks related to banks
partnering with third parties to offer small-dollar credit?
9. What steps could the FDIC take, consistent with its statutory
authority, to encourage banks to develop and offer responsible,
prudently underwritten small-dollar credit products?
Challenges
10. Are there any legal, regulatory, or supervisory factors that
prevent, restrict, discourage, or disincentivize banks from offering
small-dollar credit products? If so, please explain.
11. Are there any operational, economic, marketplace, or other
factors that prevent, restrict, discourage, or disincentivize banks
from offering small-dollar credit products? If so, please explain.
12. What factors may discourage consumers from seeking responsible,
prudently underwritten small-dollar credit products offered by banks?
Product Features
13. Are there specific product features or characteristics of
small-dollar loan products that are key to meeting the credit needs of
consumers while maintaining prudent underwriting?
14. Are there specific product features or characteristics that are
key to ensuring the economic viability to a bank of responsible,
prudently underwritten small-dollar credit products?
Innovation
15. How can technology improve the ability of banks to offer
responsible, prudently underwritten small-dollar loan products in a
sustainable and cost-effective manner? Please specify the technology or
technologies and the use case(s).
16. Are there innovations that might enable banks to better assess
the creditworthiness of potential small-dollar loan borrowers with
limited or no credit records with a nationwide credit reporting agency?
17. What role should the FDIC play, if any, in supporting
innovations that enhance banks' abilities to offer
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responsible, prudently underwritten small-dollar loans? Are there
specific barriers that prevent banks from implementing such
technologies or innovations?
18. How can technology be leveraged to improve consumers'
experiences and reduce potential risks to consumers associated with
small-dollar credit products?
Alternatives
19. What other products and services that supplement or complement
small-dollar credit offerings should banks consider? Are there other
ways that banks can help consumers address cash-flow imbalances,
unexpected expenses, or income volatility besides small-dollar credit
products?
Other
20. Are there any distinguishing characteristics of particular
institutions, such as a bank's size, complexity, or business model,
that the FDIC should consider, and if so how?
21. Please provide any other comments or information that would be
useful for the FDIC to consider.
Dated at Washington, DC, on November 15, 2018.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018-25257 Filed 11-19-18; 8:45 am]
BILLING CODE P