FDIC to Rethink Ban on Bank Small-Dollar Lending

Banks regulated by the Federal Deposit Insurance Corp. may be freed up to engage in small-dollar lending after the regulator reviews whether to withdraw a 15-year-old bulletin that essentially made such loans off limits.

The FDIC will seek comments “soon” on whether to alter or lift a 2003 bulletin that discouraged banks from engaging in small-dollar lending, Chairman Jelena McWilliams told reporters Oct. 23. One question that McWilliams wants to answer is whether having small-dollar lending in the hands of payday lenders—as opposed to federally supervised banks—could potentially harm consumers.

“Have we done more damage than good?” she said on ...