FOR IMMEDIATE RELEASE
ICBA Endorses Bill to Close ILC Loophole
Reps. Frank and Gillmor Applauded for Introducing Bipartisan Measure
Washington, D.C. (January 29, 2007)—The Independent Community Bankers of America (ICBA) strongly endorsed a bipartisan bill introduced by Reps. Barney Frank (D-Mass.), Paul Gillmor (R-Ohio) and 31 original co-sponsors to keep Wal-Mart, Home Depot and other commercial conglomerates from owning FDIC-insured banks by closing the industrial loan corporation (ILC) loophole. Frank is chairman of the House Financial Services Committee; Gillmor is ranking member of the Financial Institutions and Consumer Credit Subcommittee.
"ICBA applauds Chairman Frank and Congressman Gillmor for introducing legislation to reaffirm our nation's long-standing policy that separates commerce and banking," said Terry J. Jorde, ICBA chairman and president and CEO of CountryBank USA, Cando, N.D. "This measure is the long-term solution to ensure that Americans continue to enjoy access to the impartial allocation of credit that comes from having a diversified financial system."
ICBA has been leading the effort to maintain the separation of banking and commerce. Allowing commercial firms to own banks concentrates economic power, jeopardizes the impartial allocation of credit, poses serious competitive issues for local merchants, and places the safety and soundness of our financial and economic system at risk. Under current law, owners of ILCs are exempt from regulation and supervision under the Bank Holding Company Act. The Frank-Gillmor measure will remedy this by not only prohibiting commercial firms from owning ILCs going forward, but also by requiring all companies that currently own ILCs to register with the FDIC and comply with more stringent regulations.
"FDIC insurance was not created to underwrite commercial firms, but to protect the depositors of regulated banks," said Camden R. Fine, ICBA president and CEO. "Congress affirmed this policy in the Gramm-Leach-Bliley Act. The Frank-Gillmor bill continues the policy and ensures that our nation's deposit insurance system remains safe and secure from the risk posed by commercial firms."
ICBA has called on the FDIC to extend the moratorium on ILC formations or acquisitions beyond the Jan. 31, 2007 expiration date in order to give the new Congress time to consider and act on the issue. ICBA believes that Congress should decide this policy issue because of its far-reaching implications on the nation's banking and financial system.