BOA Gets Approval for Low Interest Small Loans

November 10, 2020 at 10:07 am Leave a comment

Good morning, folks. Your intrepid blogger is so committed to providing you the information to start your credit union day that he has managed to post this blog even after inexplicably losing power to his house. I wonder if, in the age of COVID-19, I can write off a generator as a business expense. 

In any event, here are some things to ponder this morning. 

You don’t have to be Nostradamus to realize it’s time to start planning for reduced non-interest income in the coming years. With a highly partisan Senate unlikely to go along with big legislative changes like bankruptcy reform, all eyes will be on the CFPB and who Joe Biden picks to take the helm as the next benign dictator of Consumer Protection. For months, there has been speculation in the bloggersphere that one of the first areas we could see regulatory action in involves overdraft fees. Apparently, bankers are reading the room as well – yesterday, the CEO of PNC Bank called for an end to “gotcha fees.” What a coincidence that he made the statement less than a week after President-elect Biden declared victory. 

Responding to calls for payday loan alternatives, the CFPB has signed off on a small dollar loan program. Starting in January, eligible borrowers will be able to obtain loans of $100-$500 dollars with only a $5 fee and a 36% APR that can be repaid over a 90-day period. While the product is clearly consumer-friendly, it will only be available to persons who have had Bank of America accounts for at least a year prior. As I’ve heard from many credit unions, the persons most in need of emergency small dollar loans often do not have existing banking relationships. 

On that note, enjoy your day. I’m headed to the office.

Entry filed under: COVID-19, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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