Regulatory Agencies respond to the COVID-19

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In response to the COVID-19 the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration , and Office of Comptroller of the Currency issued a joint statement, on March 26th encouraging banks, savings associations and credit unions to offer responsible small-dollar loans to consumers and small businesses.

These regulatory agencies recognize that responsible small-dollar loans can play an important role in meeting customers; credit needs because of temporary cash-flow imbalances, unexpected expenses, or income disruptions during periods of economic stress or disaster recoveries. These loans are offered through a variety of structures including open-end lines of credit closed-end installment loan, or appropriately structured single payment loans.

Banks, saving associations and credit unions are to work with borrowers who are experiencing unexpected circumstances and cannot repay a loan as structured. These financial institutions are encouraged to design to strategies to help the borrowers to repay the principal of the loan while mitigating the need to re-borrow.

This statement issued by the federal agencies is just encouraging financial institutions to meet the financial service needs of their customers and members who have been affected by the COVID-19