After the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC) issued principles for offering responsible small dollar loans to meet short-term credit needs, Online Lenders Alliance CEO Mary Jackson issued the following statement:
“We applaud the federal financial institution regulatory agencies for understanding that especially during this time of crisis, it is critical that consumers have access to financial options, especially small-dollar forms of credit. We also applaud the agencies for recognizing that the interest rate caps some are proposing for short-term credit products make those products impossible to offer, effectively eliminating them for the consumers who need them most.
“The Federal Reserve has already found that nearly four in ten adults would be unable to cover an unexpected expense of $400 out of pocket and we know that the COVID-19 crisis is leading to economic uncertainty for many Americans. These principles will help consumers with short-term credit needs by giving them options and flexibility to choose the product that best meets their unique needs.
“While our members offer credit in various forms to non-prime consumers, they also play an important role in vendor support for banks and other financial institutions, providing the technology that allows them to offer nonprime products where they would otherwise be unable to do so. Traditional financial institutions entering the market Will provide more options as unsecured small dollar loans are a true lifeline to many consumers facing unexpected expenses coupled with income shortfalls.
“As always, we encourage consumers to look for the OLA seal when seeking credit access, as it means they can trust the company they’re doing business with to follow OLA’s best practices, treat them fairly, and provide credit access in a responsible way.”