FOR IMMEDIATE RELEASE
ICBA Endorses Senate Bill to Close ILC Loophole
Sens. Johnson, Brown and Allard Applauded for Leadership on Separation of Banking and Commerce
Washington, D.C. (May 10, 2007)—The Independent Community Bankers of America (ICBA) strongly endorsed a bi-partisan Senate measure introduced by Sens. Tim Johnson (D-S.D.), Sherrod Brown (D-Ohio) and Wayne Allard (R-Colo.) to keep commercial conglomerates from owning FDIC-insured banks by closing the industrial loan corporation (ILC) loophole. These senators are members of the Senate Banking, Housing and Urban Affairs Committee where the Industrial Bank Holding Company Act of 2007 will be considered first.
"ICBA applauds Sens. Johnson, Brown and Allard for their leadership in introducing legislation to reaffirm our nation's long-standing policy of separating commerce and banking," said James P. Ghiglieri, Jr., ICBA chairman and president of Alpha Community Bank, Toluca, Ill. "This measure is the long-term solution to ensure that Americans continue to enjoy the impartial access to credit that comes from having a diversified financial system."
ICBA has worked closely with the senators' offices leading up to the introduction of this bill and has been in the forefront of efforts 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 conflicts of interest, 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 Johnson-Brown-Allard bill will remedy this by not only prohibiting commercial firms from owning ILCs going forward, but also by ensuring companies that own ILCs are subject to federal oversight and regulation.
"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 Johnson-Brown-Allard bill continues this policy and ensures that our nation's deposit insurance system remains safe and secure from the risk posed by commercial firms. We look forward to working with the Senate to move this bill forward to enactment."
ICBA believes that Congress should decide this policy issue because of its far-reaching implications on the nation's banking and financial system. The House Financial Services Committee recently sent an ICBA-endorsed ILC measure (H.R. 698) to the full House of Representatives for its consideration. H.R. 698 has 139 cosponsors.