Five federal financial regulatory agencies are encouraging banks, savings associations and credit unions to offer small loans to consumers and small businesses in response to the coronavirus pandemic.
In one joint statement released on Thursday, March 26, the Federal Reserve Board of Governors, Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corp. (FDIC), the National Credit Union Administration and the Office of the Comptroller of the Currency said they play a key role in meeting credit needs due to temporary cash flow issues, unforeseen expenses or loss of income during this time of year. economic tensions.
Saying that federally regulated financial institutions are well positioned to meet the needs of citizens during the coronavirus crisis, the letter notes that these institutions may have financial products that “could be used or modified” to help consumers now.
“These loans can be offered through a variety of structures, including open lines of credit, closed maturity loans, or appropriately structured single payment loans,” the letter said.
The loans should be offered in a way that offers fair treatment to consumers, complies with applicable laws and regulations, and conforms to safe and sound practices, the agencies suggested.
“For borrowers who experience unforeseen circumstances and cannot repay a loan as structured, banks, savings associations and credit unions are further encouraged to consider recovery strategies designed to help borrowers repay. the loan principal while reducing the need to re-borrow, they wrote.
The collaborative effort follows other steps the agencies have taken to encourage lenders to meet the financial services needs of those affected by COVID-19.
Earlier this month, agencies told institutions they would favorably consider retail banking and lending programs that meet the needs of affected low- and middle-income individuals, small businesses and farms for the purposes of of the law on community reinvestment, in accordance with good banking practices and applicable laws. , including consumer protection laws.