U.S. banking agencies issue lending risk guidance for borrowers not authorized to work

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US banking lending risk guidance

Highlights

The FDIC, OCC, and NCUA issued joint guidance emphasizing that lending to individuals not authorized to work in the U.S. poses elevated credit risk.
Financial institutions must strengthen lending risk assessments and comply with CFPB's June 8, 2026, Statement on Ability To Repay and Immigration Status under TILA and ECOA.
The new guidance, rooted in Executive Order 14406, aims to address systemic risks arising from credit or financial services provided to inadmissible and removable populations.

Credit risk standards and regulatory scope

As reported by Federal Deposit Insurance Corporation, citing the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration, today issue joint guidance reminding supervised financial institutions of their existing credit risk management obligations.

The agencies say lending to individuals who are not legally authorized to work in the U.S. may present elevated credit risk because income generation, employment continuity and overall financial stability can face greater uncertainty. The guidance tells institutions to identify, measure, monitor and control those risks through safe and sound underwriting practices that evaluate a borrower's willingness and capacity to repay under the terms of the loan.

Compliance implications for lenders

Regulators also advise financial institutions to carefully consider the Consumer Financial Protection Bureau's June 8, 2026, Statement on Ability To Repay and Immigration Status. That statement reminds creditors of their obligations under the Truth in Lending Act as implemented by Regulation Z, and under the Equal Credit Opportunity Act as implemented by Regulation B, in relation to borrowers without work authorization.

The agencies say the guidance is issued in accordance with Executive Order 14406, Restoring Integrity to America's Financial System. They frame the action as part of an effort to address risks to the financial system tied to extending credit or financial services to populations considered inadmissible and removable.

European sovereign credit risks linked to NATO’s burden shift were a focus of our earlier coverage, as governments face rising defence costs while taking on more responsibility for the continent’s security. We noted that sustained increases in military spending could strain budgets and debt trajectories, becoming a more prominent factor in how investors assess European sovereign creditworthiness.

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