ETA Submits Comments Regarding the FDIC’s proposed Examination Guidance for Third-Party Lending

October 27, 2016

Dear Ms. Miller:

The Electronic Transaction Association submits this comment letter in response to the FDIC’s proposed Examination Guidance for Third-Party Lending, released July 29, 2016…

The Electronic Transactions Association (“ETA”) appreciates this opportunity to comment on the Federal Deposit Insurance Corporation’s (“FDIC”) proposed Examination Guidance on Third-Party Lending (the “Guidance”). ETA is the leading trade association for the payments industry, representing nearly 550 companies worldwide involved in electronic transaction processing products and services. In addition to its work with companies in the payments space, ETA represents members in the small business finance industry. Many of these members offer financing opportunities to small businesses through partnerships with depository institutions, including those regulated by the FDIC. Because nonbank entities frequently employ online platforms and systems that are more efficient and cost-effective for processing and underwriting smaller commercial loans, these companies are able to provide a valuable service to banks and expand the scope of eligible small business borrowers.

While ETA supports the FDIC’s goal of promoting safe and sound banking practices, we suggest that the FDIC further tailor the Guidance to reflect important differences between consumer and small business lending, and also to avoid language that suggests third-party lending relationships should be viewed with heightened scrutiny or suspicion. The Guidance should foster innovation in a market that is benefiting small businesses seeking capital to grow. Adopting a one-size-fits-all Guidance that treats all third-party relationships the same may have the unintended consequence of encouraging “de-risking” by banks with existing or potential third-party lending relationships. Such an outcome would harm small businesses by restricting their access to much needed credit.

Please follow this link to view ETA’s full comments to the FDIC.