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U.S. Bank Regulator Encourages Banks to Reconsider Small-Dollar Lending - ABI

A leading U.S. bank regulator yesterday said banks should consider offering more short-term, small-dollar loans, inviting the industry to engage in lending it had once actively discouraged, Reuters reported. The new guidance from the Office of the Comptroller of the Currency (OCC) makes explicit that the regulator would be open to banks offering such short-term loans, inviting banks to compete with alternative financial products like payday loans. The three-page bulletin from the OCC does not alter any existing regulations, but makes clear an about-face at the national bank regulator. Under the Obama administration, the OCC had actively discouraged short-term lending by banks, issuing rules in 2013 that effectively drove banks away from that type of lending by imposing strict limitations on what customers could be extended that type of credit and on what terms. The OCC rescinded those rules in 2017, and Otting said that the purpose of yesterday’s bulletin was to make clear where the regulator now stands.

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