Nacha News

Nacha creates broadly adopted payment and financial messaging rules and standards through consensus-led governance, international collaboration, and innovative development practices. We continually advance the ubiquitous ACH Network and engage diverse stakeholders to accelerate a digital future of global financial services interoperability.

FDIC’s McWilliams Wants Bank Regulators to Have a Common Standard for Small-Dollar Loans

Federal regulators need to create consistent guidance on the standards for bank small-dollar loan offerings. FDIC Chair, Jelena McWilliams stated that banks have been unwilling to get involved in the small-dollar loan market is because the three main federal banking regulators, the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency, all have different guidelines in place for such product offerings.

McWilliams is advocating that banks need to get involved in small-dollar loans in order to take market share away from high-interest loans that payday lenders offer.

The FDIC currently has a 2013 bulletin in place that effectively stopped banks it oversees from issuing deposit advance loans as a result to the outcry of payday loans leading consumers into debt traps.

Recently, the OCC canceled that 2013 bulletin after the CFPB issued its payday lending rule, and Comptroller of the Currency Joseph Otting has been encouraging banks to get involved in the market and introduced a bulletin to that effect last year.