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FDIC, OCC Propose Guidance on Deposit Advances

Posted on 4/26/2013

The FDIC and OCC yesterday proposed new guidance intended to ensure that banks are aware of the "significant" risks associated with deposit advance products.

The agencies propose that examiners assess credit quality and underwriting (including a customer's ability to repay and bank relationship), adequacy of capital, banks' reliance on fee income, allowance for losses, compliance with consumer protection laws, management oversight, and relationships with third parties.

The guidance "reflects the serious risks that certain deposit advance products may pose to financial institutions and their customers," said FDIC Chairman Martin Gruenberg. "Many financial institutions already profitably offer affordable small-dollar loans as an alternative to high-cost payday loans, and we encourage institutions to continue to seek ways to responsibly meet the need for small loans."

Comments on the proposals are due within 30 days of their publication in the Federal Register.

To read the OCC's proposal visit: http://www.occ.gov/news-issuances/bulletins/2013/bulletin-2013-11a.pdf

To read the FDIC's proposal visit: http://fdic.gov/news/news/press/2013/pr13031a.pdf



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