Supervision and Regulation Letters

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SR 20-7 / CA 20-5:

Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF
SUPERVISION AND REGULATION

DIVISION OF CONSUMER
AND COMMUNITY AFFAIRS

SR 20-7 / CA 20-5
March 30, 2020

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK AND TO INSTITUTIONS SUPERVISED BY THE FEDERAL RESERVE

SUBJECT:

Joint Statement Encouraging Responsible Small-Dollar Lending in Response to COVID-19

Applicability:  This letter is relevant to all institutions supervised by the Federal Reserve.

On March 26, 2020, the Federal Reserve and four other federal financial regulatory agencies issued a joint statement encouraging banks, savings institutions, and credit unions to offer responsible small-dollar loans to consumers and small businesses in response to COVID‑19.1 A supervised institution’s small-dollar lending activity could help customers meet their needs for credit due to temporary cash-flow imbalances, unexpected expenses, or income short-falls during periods of economic stress or disaster recoveries.  This guidance follows other recent issuances of the agencies to encourage financial institutions to meet the financial services needs of their customers who have been affected by COVID-19.2

Reserve Banks are asked to distribute this letter to the Federal Reserve-supervised institutions in their districts, as well as to their supervisory and examination staff.  If Federal Reserve-supervised financial institutions have questions about the guidance set forth in this letter, they are encouraged to contact their primary contact at the responsible Federal Reserve Bank.  In addition, questions may be sent via the Board’s public website.3

signed by
Michael S. Gibson
Director
Division of
Supervision and Regulation

signed by
Eric S. Belsky
Director
Division of Consumer
and Community Affairs

Attachments:
Cross References:
  • SR Letter 20-4 / CA Letter 20-3, "Supervisory Practices Regarding Financial Institutions Affected by Coronavirus"
  • CA Letter 20-4, "CRA Consideration for Activities in Response to the Coronavirus"
Notes:
  1. See March 26, 2020, Board press release at:  https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200326a.htm  Return to text.
  2. Refer to the Board’s public website for COVID-19 related guidance at: https://www.federalreserve.gov/covid-19.htm  Return to text.
  3. See http://www.federalreserve.gov/apps/contactus/feedback.aspx  Return to text.
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Last Update: March 30, 2020