Highlights:

• Small-dollar loans are in strong demand. The goal of a small-dollar loan program is to enable insured institutions to better serve an underserved and potentially profitable market, while helping consumers avoid, or transition away from, reliance on high-cost debt.
• The guidelines encourage insured institutions to offer small-dollar loan products that have affordable, reasonable interest rates with no or low fees and payments that reduce the principal balance of the loan.
• As part of their programs, institutions may consider offering financial education and a savings component in order for borrowers to reduce their reliance on high-cost, short-term credit.
• During a Community Reinvestment Act (CRA) examination, FDIC examiners may favorably consider small-dollar loan programs when evaluating the lending performance of small, intermediate-small, and large institutions. A small-dollar loan program may be viewed as uniquely responsive in helping to meet the credit needs of a community.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Loan Officer
Chief Compliance Officer
CRA Officer
Chief Information Technology Officer

Related Topics:

• Interagency Proposed Statement on Subprime Mortgage Lending
  http://www.fdic.gov/news/news/inactivefinancial/2007/fil07026.html
• Expanded Guidance for Subprime Lending Programs
  http://www.fdic.gov/news/news/financial/2001/fil0109.html
• Questions and Answers on the Community Reinvestment Act
  http://www.ffiec.gov/cra/pdf/qa01.pdf - PDF 285k (PDF Help)
• Joint Guidance on Overdraft Protection Programs
  http://www.fdic.gov/news/news/financial/2005/fil1105.html
• Regulation E, 12 C.F.R. .205.10(e)
  http://www.fdic.gov/regulations/laws/rules/6500-3100.html#6500205.10

Attachment:
Affordable Small-Dollar Loan Guidelines

Contacts:
Robert Mooney, Acting Deputy Director, Compliance & Consumer Protection, at (202) 898-3911 or RMooney@fdic.gov;
April Breslaw, Acting Associate Director, Compliance Policy & Examination Support Branch, at (202) 898-6609 or APBreslaw@fdic.gov;
Mira Marshall, Acting Chief, CRA/Fair Lending Section, at (202) 898-3912 or MMarshall@fdic.gov;
or Carol Rosa, Policy Analyst, at
(202) 898-8515 or CRosa@fdic.gov

Printable Format:
FIL-50-2007 - PDF (PDF Help)

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/2007/index.html.

To receive FILs electronically, visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained via the FDIC's Public Information Center (1-877- 275-3342 or 703-562-2200).