Certified Regulatory Compliance Manager (CRCM) — Question 315

Banks must maintain an ____________ adequate to absorb estimated credit losses from payday loans. Banks should evaluate the collectability of accrued fees and finance charges on payday loans and ensure that this income is appropriately measured.

Answer options

• A. TILA
• B. FCRA
• C. ALLL
• D. A and B both

Correct answer: C

Explanation

The correct answer is C, ALLL (Allowance for Loan and Lease Losses), which is specifically designated for covering anticipated credit losses. Options A and B, TILA (Truth in Lending Act) and FCRA (Fair Credit Reporting Act), are regulations that govern lending practices but do not relate to the specific financial reserve required for credit losses.