Dec
OCC provides banking institutions green light to contend with payday loan providers
Any office associated with the Comptroller regarding the Currency is shaking up the realm of short-term financing by motivating banks to provide rate that is high-interest to subprime borrowers as an option to payday loan providers.
In an important break from previous regulators, Comptroller Joseph Otting stated Wednesday he wishes banking institutions to originate loans of $300 to $5,000 to borrowers with FICO ratings of 680 or below, with few other parameters beyond “sound underwriting.” The newest OCC tips could start a $90 billion market to institutions that are financial.
“this system is a car to help individuals get right back into conventional banking and obtain them away from high-cost monetary solutions items of check-cashing and lending that is payday with a view toward getting them in to the conventional of monetary tasks where they could be eligible for a credit cards,” Otting said on a meeting call with reporters.
“we physically think banking institutions can offer that in a safer, noise more economically-efficient manner.”
The OCC issued a bulletin making clear its assistance with short-term, small-dollar installment loans, but stated the agency failed to conduct research prior to the release.