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PR-5-2003 (1-29-03)
Media Contact:
Phil Battey (202) 898-6993

The Federal Deposit Insurance Corporation (FDIC) has developed guidelines for payday lending. A draft of this guidance, which the FDIC intends to issue on March 31, 2003, is attached.

Payday loans are small dollar, short-term, unsecured loans that borrowers promise to repay out of their next paycheck or regular income payment. Although the number of known insured depository institutions involved in payday lending is small, third-party payday lenders are actively seeking relationships with insured financial institutions.

The draft guidance would apply to all institutions under the FDIC's supervision that offer payday lending programs. It describes the FDIC's expectations for prudent risk-management practices for payday lending activities, particularly with regard to capital, allowance for loan and lease losses, and classifications. The draft also addresses guidelines for recovery practices, income recognition, and managing risks associated with third-party relationships, as well as consumer protection issues.

As the FDIC completes its review of the draft document, it is interested in the views of affected institutions and other interested parties as to whether the draft provides clear guidance concerning the FDIC's expectations about payday lending practices. Institutions and other parties that choose to respond should provide their views electronically no later than 5:00 p.m. on March 14, 2003. Responses should be submitted by fax to (202) 898-3827 or electronic mail to All comments should refer to "Draft Guidelines for Payday Lending."
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Attachment: Draft Guidelines for Payday Lending [no longer available]

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 9,415 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing the risks to which they are exposed. The FDIC receives no tax dollars - insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at or through the FDIC's Public Information Center (877-275-3342 or (703) 562-2200.)

Last Updated 1/29/2003

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