Regulators urge banks and credit unions to think about providing small-dollar loans — consumer advocates call it an idea that is‘terrible’
Regulators are urging banking institutions to offer their clients loans to assist them to weather the coronavirus emergency that is national.
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Regulators are pressing for banking institutions, credit unions and cost cost savings associations to give customers and smaller businesses with small-dollar loans to greatly help offset the economic burden due to the coronavirus emergency that is national. But customer advocates state these loans could “trap individuals in a cycle of repeat re-borrowing and crushing debt. ”
The Board of Governors associated with Federal Reserve System, customer Financial Protection Bureau, Federal Deposit Insurance Corporation, nationwide Credit Union management, and workplace associated with Comptroller associated with the Currency issued a letter that is joint banks and credit unions to provide small-dollar loans for their clients.
“Responsible small-dollar loans can play a essential part in conference customers’ credit requirements due to short-term cash-flow imbalances, unforeseen costs, or earnings disruptions during durations of financial anxiety or catastrophe recoveries, ” the agencies penned within the letter.