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Valerie L. Hletko Quoted in American Banker Article, “Large Banks Uncertain of Path Forward on Small-Dollar Loans”

American Banker

Valerie L. Hletko

Valerie L. Hletko was quoted on November 1, 2017, in an American Banker article, “Large Banks Uncertain of Path Forward on Small-Dollar Loans,” which examined how banks are eyeing a return to the deposit advance business. The article noted, “Banks generally had exited the business to avoid running afoul of payday- and anti-predatory-lending rules. Yet last year several big banks were on the verge of jumping back into the small-dollar lending business with a detailed plan to provide short-term installment loans that they said would solve the problem.  The Consumer Financial Protection Bureau released its long-awaited payday rule in October, imposing stricter underwriting standards on loans of up to 45 days. Banks reentering small-dollar lending would have to carefully steer around that rule's requirements. On the same day, the Office of the Comptroller of the Currency rescinded guidance that discouraged banks from offering deposit advance products, typically designed as short-term credits with one-time payments. Similar guidance from the Federal Deposit Insurance Corp. remains in place.“

Hletko noted, “In the coming months, it is unlikely that the OCC will issue guidance laying out a detailed path forward on small-dollar lending. Instead, the agency will likely take a proactive approach to working with banks interested in designing a small-dollar loan. 

“It’s a great opportunity to have a regulatory laboratory," Hletko said in describing the challenge of designing a profitable small-dollar loan within the current regulatory patchwork. “They’ll let banks be guided by their good judgment, typically in consultation with their examiners."

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