Banks Have Role in Small-Dollar Loan Market, OCC Official Says

By Jeff Bater

Encouraging small-dollar lending by banks will be among the Office of the Comptroller of the Currency’s priorities, a top agency official said.

The short-term loans will give banks an opportunity to expand their products, said Vance Price, deputy comptroller for international banking supervision at the agency. His remarks March 5 at an Institute for International Banking conference in Washington came as the Consumer Financial Protection Bureau’s payday rule remains in limbo.

“Banks can and should be part of small-dollar loan market,” he said. “They can do it very well. They can probably do it better than anyone.”

Small-dollar loan products had been pushed out of banking sector but should be brought back and be subject to oversight, Joseph Otting, the head of the OCC, said during his confirmation hearing in July 2017. President Donald Trump picked Otting to run the agency.

Payday Rule

The CFPB approved a rule in October on short-term, small-dollar loans. That agency established the first set of federal regulations for lenders that offer loans with high interest rates that typically have to be repaid within two to four weeks. Payday lenders must determine upfront whether consumers have the ability to repay their loans. The CFPB also placed limits on repeat loans.

But the bureau, under acting Director Mick Mulvaney, announced in January that it would reconsider the payday lending standards issued under his predecessor, Richard Cordray.

Price’s remarks came five months after the OCC voided 2013 guidance that had prompted banks to pull out of the deposit advance market amid fears of regulatory scrutiny by examiners.

Deposit advances are lines of credit offered to bank customers as a feature of an existing account. Advances are repaid automatically when the next qualifying electronic deposits are made to the consumer’s account.

The OCC’s rescission of the guidance came the same day the CFPB approved its payday rule.

To contact the reporter on this story: Jeff Bater in Washington at

To contact the editor responsible for this story: Michael Ferullo at

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.