Regulatory AlertsSR 20-7: Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19
The Federal Reserve and four other federal financial regulatory agencies issued a joint statement encouraging banks, savings institutions, and credit unions to offer responsible small-dollar loans to consumers and small businesses during the COVID-19 pandemic. This guidance aims to help customers meet credit needs arising from temporary cash-flow imbalances, unexpected expenses, or income shortfalls caused by economic stress. Federal Reserve-supervised institutions are directed to distribute this letter to their supervisory and examination staff and may contact their primary Federal Reserve Bank for questions regarding the guidance.
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SR 20-7 / CA 20-5: Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D.C. 20551
DIVISION OF SUPERVISION AND REGULATION
DIVISION OF CONSUMER AND COMMUNITY AFFAIRS
SR 20-7 / CA 20-5
March 30, 2020
TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK AND TO INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE
SUBJECT:
Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19
Applicability: This letter is relevant to all institutions supervised by the Federal Reserve.
On March 26, 2020, the Federal Reserve and four other federal financial regulatory agencies issued a joint statement encouraging banks, savings institutions, and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID‑19. 1 A supervised institution’s small-dollar lending activity could help customers meet their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income short-falls during periods of economic stress or disaster recoveries. This guidance follows other recent issuances of the agencies to encourage financial institutions to meet the financial services needs of their customers who have been affected by COVID-19. 2
Reserve Banks are asked to distribute this letter to the Federal Reserve-supervised institutions in their districts, as well as to their supervisory and examination staff. If Federal Reserve-supervised financial institutions have questions about the guidance set forth in this letter, they are encouraged to contact their primary contact at the responsible Federal Reserve Bank. In addition, questions may be sent via the Board’s public website. 3
signed by Michael S. Gibson Director Division of Supervision and Regulation
signed by Eric S. Belsky Director Division of Consumer and Community Affairs
Attachments:
Joint Release, " Encouraging Responsible Small-Dollar Lending in Response to COVID-19 " (March 26, 2020) .
Cross References:
SR Letter 20-4 / CA Letter 20-3, "Supervisory Practices Regarding Financial Institutions Affected by Coronavirus"
CA Letter 20-4, "CRA Consideration for Activities in Response to the Coronavirus"
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Last Update: March 30, 2020