OCC offers banking institutions green light to contend with payday loan providers

OCC offers banking institutions green light to contend with payday loan providers

Any office for the Comptroller regarding the Currency is shaking up the realm of short-term financing by motivating banks to provide high-interest price loans to subprime borrowers as an alternative to payday loan providers.

In a significant break from previous regulators, Comptroller Joseph Otting stated Wednesday he desires banking institutions to originate loans of $300 to $5,000 to borrowers with FICO ratings of 680 or below, with few other parameters beyond “sound underwriting.” The latest OCC directions could start a $90 billion market to institutions that are financial.

“the product is a car to help individuals get right back into main-stream banking to get them off of high-cost economic services items of check-cashing and payday financing, having a view toward getting them to the main-stream of economic activities where they could be eligible for credit cards,” Otting said on a meeting call with reporters.

“we myself think banking institutions provides that in a safer, noise more economically-efficient way.”

The OCC issued a bulletin making clear its assistance with short-term, small-dollar installment loans, but stated the agency would not conduct research ahead of the launch. Continue reading OCC offers banking institutions green light to contend with payday loan providers