Regulators tighten credit rules for lenders serving unauthorized workers

Three major U.S. banking regulators jointly issued guidance on Friday reminding financial institutions to carefully manage credit risks when lending to borrowers who are not legally authorized to work in the country. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Administration released the bulletin, which the AP characterized as part of a broader crackdown under the Trump administration.

"The Trump administration is cracking down on financial institutions that lend to people living in the U.S. illegally."

According to the OCC's release, the guidance is not new policy but a reminder of existing supervisory expectations. "The agencies are reminding supervised financial institutions of existing supervisory expectations regarding credit risk management for borrowers who are not legally authorized to work in the United States," the OCC stated.

The directive follows a May executive order from President Trump urging banks to scrutinize customers' citizenship status, the AP reported. Fox Business noted that the Consumer Financial Protection Bureau had previously told lenders they may consider a borrower's legal work authorization, adding another layer of regulatory signals on the issue.

Fox BusinessFeds warn banks on lending to unauthorized workers

y94.com reported that the guidance advises banks to be cautious and use sound underwriting practices. The AP also detailed that the administration has reclassified certain tax credits as federal benefits, a move that affects some immigrant taxpayers and could further complicate lending decisions for undocumented workers.

y94.comU.S. bank regulators warn firms on lending to undocumented workers