United States: FDIC Chair Jelena McWilliams Highlights Policies To Serve Underbanked Customers

Last Updated: February 8 2019
Article by Steven D. Lofchie
Most Read Contributor in United States, January 2019

FDIC Chair Jelena McWilliams highlighted agency priorities to ensure that banks offer "affordable, responsible financial products and services to consumers across the spectrum."

In remarks at the Florida Bankers Association Leadership Dinner, Ms. McWilliams stated that the agency's priorities include:

  • encouraging de novo bank formation; she said that de novo banks are a "key source of new capital, talent, ideas, and ways to serve customers";
  • tailoring FDIC's regulations to permit banks to serve customers more efficiently while also making sure banks stay "safe and sound";
  • taking a "holistic" look at the FDIC's supervision of banks;
  • ensuring that banks "leverag[e] technology" to reach unbanked and underbanked consumers;
  • "protecting the Deposit Insurance Fund and maintaining financial stability [while] allowing banks room to be nimble and make the right business decisions to better serve their customers and communities"; and
  • ensuring that the FDIC and the banking industry respond to changes in consumer behavior.

Commentary

FDIC Chair McWilliams' comments focused to a significant degree on assisting banks in providing services to the poor and overextended, those who live "paycheck to paycheck" and who sometimes "need immediate access to cash to cover an unexpected cost before the next paycheck." The business of lending money to those who urgently need small amounts for short periods was disparagingly referred to as "payday lending." Under the CFPB's prior administration the CFPB adopted rules that would have significantly discouraged such lending. See, e.g.,  CFPB Imposes Stricter Rules for Payday Lending. While it is all well and good to regulate practices that protect disadvantaged consumers, it is not so great if the protection leaves these consumers worse off by depriving them entirely of access to credit. Ms. McWilliams comments suggest that she will be more attuned to the costs as well as the benefits of regulation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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