E7-16215. Agency Information Collection Activities: Submission for OMB Review; Comment Request; 3064-0121

AGENCY:

Federal Deposit Insurance Corporation (FDIC).

ACTION:

Notice of information collections to be submitted to OMB for review and approval under the Paperwork Reduction Act of 1995.

SUMMARY:

In accordance with requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the FDIC hereby gives notice that it is submitting to the Office of Management and Budget (OMB) a request for OMB review and approval of the renewal or revision of the information collection systems described below. The collection would provide information on the features and effectiveness of small-dollar programs offered by FDIC-insured financial institutions.

DATES:

Comments must be submitted on or before September 17, 2007.

ADDRESSES:

Interested parties are invited to submit written comments on the collection of information entitled: Pilot Study of Small Dollar Loan Programs. All comments should refer to the name of the collection. Comments may be submitted by any of the following methods:

• http://www.FDIC.gov/​regulations/​laws/​federal/​propose.html.
• E-mail: [e-mail]. Include the name and number of the collection in the subject line of the message.
• Mail: Leneta G. Gregorie (202.898.3719), Counsel, Federal Deposit Insurance Corporation, Room F-1064, 550 17th Street, NW., Washington, DC 20429.
• Hand Delivery: Comments may be hand-delivered to the guard station at the rear of the 550 17th Street Building (located on F Street), on business days between 7 a.m. and 5 p.m.

A copy of the comments may also be submitted to the OMB Desk Officer for the FDIC, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10235, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT:

Interested members of the public may obtain additional information about the collection, including a copy of the proposed collection and related instructions without charge, by contacting Leneta G. Gregorie, at the address identified above.

SUPPLEMENTARY INFORMATION:

Proposal To Seek OMB Approval for the Following New Collection of Information

Title: Pilot Study of Small-Dollar Loan Programs.

OMB Number: 3064-NEW.

Frequency of Response: Pilot study application—one time; Program evaluation reports—quarterly for two years.

Affected Public: Insured depository institutions that apply for and are accepted to participate in the pilot study.

Estimated Number of Respondents: Pilot study application—40; Program evaluation reports—20 to 40.

Estimated Time per Response: Pilot study application—estimated average of 2 hours per respondent; Program evaluation reports—estimated average of 5 hours per respondent.

Estimated Total Annual Burden: Pilot study application—40 respondents times 2 hours per respondent = 80 hours; Program evaluation reports—20 to 40 respondents times 5 hours per respondent times 4 (quarterly). Total burden = 80 + 800 = 880 hours.

General Description of Collection: In recognition of the huge demand for small-dollar, unsecured loans, as evidenced by the proliferation around the country of payday lenders, the FDIC, on December 4, 2006, proposed and sought comment on guidelines for such products (http://www.fdic.gov/​news/​news/​press/​2006/​pr06107.html). The proposed guidelines addressed several aspects of product development, including affordability and streamlined underwriting. Based on the comments received, the FDIC issued final guidelines on June 19, 2007, entitled “Affordable Small-Dollar Loan Guidelines” (http://www.fdic.gov/​news/​news/​financial/​2007/​fil07050.html). The FDIC's goal in issuing the guidelines is to encourage financial institutions to offer small-dollar, unsecured loans in a safe and sound manner that is also cost-effective and responsive to customer needs.

To further encourage the development by insured financial institutions of small-dollar credit programs, the FDIC is contemplating conducting a pilot study to assess the viability of such programs, with the goal of demonstrating the extent of their profitability, determining the degree to which customers of such programs migrate into other banking products, determining the extent to which a savings component results in increased savings and debt reduction, and identifying program features which can be deemed “best practices.” Programs selected for the pilot may be either already in existence at a bank or developed specifically for participation in the study.

Volunteers for the program must be well managed, well capitalized institutions, and not be subject to any enforcement actions. Banks interested in participating will provide a description of their existing or proposed small-dollar loan program to the FDIC. Key features of a preferred small-dollar lending program might include loan amounts of up to $1,000; amortization periods longer than a single pay cycle and up to 36 months for closed end credit, or minimum payments which reduce principal (i.e., do not result in negative amortization) for open end credit; annual percentage rates (APR) below 36 percent; no prepayment penalties; origination fees limited to the amount necessary to cover actual costs; a savings component; and a financial education component.

The pilot study will require the quarterly collection of data from participating institutions, to the extent such data are not currently included in the Call Reports or other standard regulatory reports, to evaluate program success. For this purpose, the FDIC anticipates that the following (or similar) information will be collected from participating institutions on a quarterly basis:

• The total number and total dollar amount of small-dollar loans made under the pilot program;
• Average loan term and average dollar size of such loans;
• Average interest rates charged, average fees levied, and average calculations of APR, as required by the Truth in Lending Act;
• Aggregate delinquency, charge-off, and workout financing data;
• Profitability and/or break-even data for the overall program;
• The total number and total dollar amount of linked savings accounts opened as part of the program;
• Information as to duration and withdrawal rates of linked savings accounts;
• Data on utilization rates of any financial education component;
• Information regarding whether customers of the program migrated to other bank products; and
• To the extent possible, whether offering affordable loan products helped to wean customers off of high-cost debt.

The preferred method for collecting these data is electronic submission through the existing FDIConnect data interface system to minimize burden on respondents. The survey will be conducted quarterly, fifteen days after the deadline for banks to file their mandatory Call Reports. The study will conform to privacy rules and will not request any information that could be used to identify individual bank customers, such as name, address, or account number. All data from participating insured institutions will remain confidential. It is the intent of the FDIC to publish only general findings of the study.

Request for Comment

Comments are invited on: (a) Whether these collections of information are necessary for the proper performance of the FDIC's functions, including whether the information has practical utility; (b) the accuracy of the estimate of the burden of the information collections, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology. All comments will become a matter of public record.

Dated at Washington, DC, this 14th day of August, 2007.

Federal Deposit Insurance Corporation.

Robert E. Feldman,

Executive Secretary.