Agencies closer to joint policies on CRA, small-dollar loans: FDIC head

WASHINGTON — Federal bank regulators could begin drafting changes both to the Community Reinvestment Act and small-dollar lending policies in a matter of days, Federal Deposit Insurance Corp. Chairman Jelena McWilliams said on Wednesday.

The prospect of regulators beginning to write a new CRA rule imminently is consistent with the projection by Comptroller of the Currency Joseph Otting that an initial proposal will be released sometime this summer.

McWilliams, who fielded questions following the release of the FDIC's bank earnings report, said agency leaders hope to have a preliminary CRA document ready soon for their internal review.

“We continue with our weekly meetings, at the principal level of the agencies, and we’re hoping to have a draft document for internal discussion pretty soon ... within a week or so. And then we will have internal discussions and then we can start drafting altogether from there on the CRA,” McWilliams said.

McWilliams said the federal banking agencies are also discussing whether to update their policy on small-dollar lending, through either a joint rulemaking or joint guidance. The regulators have previously taken piecemeal approaches to setting ground rules for banks to compete with small-dollar lenders.

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“I’m actually planning to share a draft document with the other agencies in the next few days,” she said.

Getting the agences to agree on a CRA reform plan will likely be a bigger haul. The 1977 law, which grades banks on lending to communities they serve, has not been significantly updated since the 1990s.

The Office of the Comptroller of the Currency initially went on its own last year soliciting comments on how to update that law but McWilliams said the prudential bank regulators are now jointly working on a draft.

A CRA reform framework to be evaluated by agency principals would start as “a basic document and then we’re still hoping to get a notice of proposed rulemaking within a couple months after that,” McWilliams said.

The FDIC has already fielded comments on how it should regulate banks that want to offer small-dollar lending. However, the agency has stopped short of rescinding its previous 2013 joint guidance that essentially banned banks from offering deposit advance products. The OCC followed a different path in 2017 by rescinding its deposit advance guidance outright, and has taken other steps to signal a green light for banks getting more involved in small-dollar loans.

At the FDIC briefing, McWilliams would not commit either way to whether a joint small-dollar policy would include a cap on interest rates.

“I can’t speak on the specifics because we need to be in agreement with the other agencies,” she said.

"There is generally an agreement we should proceed together. ... We shouldn’t have three separate approaches as to how our institutions are looking at small-dollar and I’m still hopeful that we’ll be able to come to the finish line altogether in some kind of a joint effort.”