Select Comments by FDIC Chairman Bair
ABA Telephone Briefing on Small Dollar Loans
March 29, 2007
“We have issued proposed guidelines, the comment period has ended now, to offer CRA credit to banks who are willing to offer responsibly priced small dollar credit products.” – Track 2, Disk 1
“We’re also encouraging direct deposit and offering a lower rate if people will use automatic deductions for the repayments. We think that can, again, it’ll help people who might not have a lot of discipline repaying loans. Those are features that will help them make sure that they repay their loans on time and avoid late fees. It also helps too with the credit risk.” – Track 3, Disk 1
“We want these products to be widely available.” -- Track 3, Disk 1
“We’d like to try to work with banks to see if can get more products along these lines offered.” – Track 3, Disk 1
“We do plan to finalize the Guidelines expressly providing for CRA credit.” – Track 3, Disk 1
“I think the credit risk of these products, there is a perception that it is higher than it is. And I think certainly, the consortium of Pennsylvania credit unions are offering basically the same product with some differences that the North Carolina State Employees Credit Union is offering with a much more diverse customer base. So far they feel that they are at least breaking even and I think they are actually going to be turning a profit and may actually be reducing the rate they are offering. They are currently at 18% now.” – Track 4, Disk 1
“If they [the North Carolina State Employees Credit Union] can turn a profit at 12%, you can’t tell me these banks can’t try to turn a profit at 36%.” – Track 4, Disk 1
“We want this [bank small dollar lending] to be broadly available.” – Track 4, Disk 1
“I have no doubt banks will make money. We just got to get them to try it.” – Track 5, Disk 1
“I think most banks already have lines of credit linked to checking accounts or they make small dollar installment loans. I think the products are already there. It’s just a matter of how broadly available they’re made. So, I in terms of developing infrastructure to offer the product, the products are already there.” -- Track 5, Disk 1
“I just think the start up costs should be that high.” – Track 5, Disk 1
“We’re trying to provide deposit incentives as well as CRA incentives for people to launch pilots so we can prove this to bankers.” -- Track 5, Disk 1
“We’re happy to give it the FDIC seal of approval if you’re below that [36% APR]. We’ve talked to a lot of consumer groups. I think the consumer groups will be happy with it too.” -- Track 5, Disk 1
Quotes from Others:
“All you would need to do is to when the examiners are conducing the CRA examination mention that you do make small dollar loans such as we’re talking about today, and they will consider those and they will consider those favorably.” -- Bob Mooney, Track 7, Disk 1
ABA Telephone Briefing on Small Dollar Loans
March 29, 2007
“We have issued proposed guidelines, the comment period has ended now, to offer CRA credit to banks who are willing to offer responsibly priced small dollar credit products.” – Track 2, Disk 1
“We’re also encouraging direct deposit and offering a lower rate if people will use automatic deductions for the repayments. We think that can, again, it’ll help people who might not have a lot of discipline repaying loans. Those are features that will help them make sure that they repay their loans on time and avoid late fees. It also helps too with the credit risk.” – Track 3, Disk 1
“We want these products to be widely available.” -- Track 3, Disk 1
“We’d like to try to work with banks to see if can get more products along these lines offered.” – Track 3, Disk 1
“We do plan to finalize the Guidelines expressly providing for CRA credit.” – Track 3, Disk 1
“I think the credit risk of these products, there is a perception that it is higher than it is. And I think certainly, the consortium of Pennsylvania credit unions are offering basically the same product with some differences that the North Carolina State Employees Credit Union is offering with a much more diverse customer base. So far they feel that they are at least breaking even and I think they are actually going to be turning a profit and may actually be reducing the rate they are offering. They are currently at 18% now.” – Track 4, Disk 1
“If they [the North Carolina State Employees Credit Union] can turn a profit at 12%, you can’t tell me these banks can’t try to turn a profit at 36%.” – Track 4, Disk 1
“We want this [bank small dollar lending] to be broadly available.” – Track 4, Disk 1
“I have no doubt banks will make money. We just got to get them to try it.” – Track 5, Disk 1
“I think most banks already have lines of credit linked to checking accounts or they make small dollar installment loans. I think the products are already there. It’s just a matter of how broadly available they’re made. So, I in terms of developing infrastructure to offer the product, the products are already there.” -- Track 5, Disk 1
“I just think the start up costs should be that high.” – Track 5, Disk 1
“We’re trying to provide deposit incentives as well as CRA incentives for people to launch pilots so we can prove this to bankers.” -- Track 5, Disk 1
“We’re happy to give it the FDIC seal of approval if you’re below that [36% APR]. We’ve talked to a lot of consumer groups. I think the consumer groups will be happy with it too.” -- Track 5, Disk 1
Quotes from Others:
“All you would need to do is to when the examiners are conducing the CRA examination mention that you do make small dollar loans such as we’re talking about today, and they will consider those and they will consider those favorably.” -- Bob Mooney, Track 7, Disk 1
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