FOR IMMEDIATE RELEASE
ICBA Applauds Congressional Call for Delay in Wal-Mart Application
Washington, D.C. (December 16, 2005) — The Independent Community Bankers of America (ICBA) applauded 26 members of the House Financial Services Committee for writing to the FDIC asking for a delay in making a decision on Wal-Mart's application for an industrial loan company (ILC) until the FDIC board is at full strength, and for calling on the FDIC to hold a public hearing on this issue. Reps. Paul Gillmor (R-Ohio) and Barney Frank (D-Mass.) drafted the letter. ICBA commends Reps. Gillmor and Frank for this initiative and strongly urges the FDIC to follow through with the lawmakers' requests.
"This application represents a critical point in the nation's banking history, and we whole-heartedly agree that the issue must be publicly aired and thoroughly vetted by the FDIC," said Camden R. Fine, ICBA president and CEO.
"Granting an application to Wal-Mart to start a bank erodes the long-established policy separating banks from commercial activity," said David E. Hayes, ICBA chairman, and president and CEO of Security Bank, Dyersburg, Tenn. "Debate on this crucial issue should be conducted in full public view."
Industrial loan companies are hybrid financial charters that, through a loophole in the law, fall outside the jurisdiction of the Bank Holding Company Act. Thus, they can be owned by commercial firms, such as Wal-Mart, and they evade consolidated supervision by the Federal Reserve Board. ICBA has been in the forefront of efforts to close the ILC loophole to block commercial companies from buying or chartering ILCs.
Keeping banks and commercial firms separate is important to avoid overwhelming economic concentration, direct threats to consumers and the safety and soundness of the financial system. In addition, conflicts of interest might arise if a Wal-Mart bank, for example, made credit decisions about companies that compete with Wal-Mart stores. ICBA strongly supports maintaining the separation of banking and commerce.