FOR IMMEDIATE RELEASE
ICBA and 70+ Business, Banking, Labor and Consumer Groups Urge Senate to Close ILC Loophole
Washington, D.C. (July 26, 2007)—The Independent Community Bankers of America (ICBA) and a coalition of more than 70 business, banking, labor, consumer and public interest groups sent a letter to Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) calling on the committee to advance legislation to preserve the historic separation between banking and commerce by preventing commercial firms from owning a bank through the industrial loan company loophole.
"A diverse cross-section of the nation -- bankers, Realtors, labor, consumers, small businesses and many others -- strongly supports closing this loophole and advancing the Industrial Bank Holding Company Act of 2007 (S. 1356)," said James P. Ghiglieri, Jr., ICBA chairman and president of Alpha Community Bank, Toluca, Ill. "ICBA and more than 70 organizations with members in every state urge the Senate Banking Committee to quickly consider this vital legislation to promote consumer choice and maintain the integrity, safety and soundness of our nation's financial system."
Despite federal law and long-standing policy that prohibits the mixing of banking and commerce, commercial firms are increasingly working to exploit a loophole and operate FDIC-insured banks. Senators Tim Johnson (D-S.D.), Sherrod Brown (D-Ohio), and Wayne Allard (R-Colo.) introduced S.1356 in May. The U.S. House of Representatives passed its version of the bill, the Industrial Bank Holding Company Act of 2007 (H.R. 698) by a significant majority of 371-16 in May.
Without this bill, commercial companies will use the ILC loophole to take retail deposits, exert control over the nation's payments system and expose it to unnecessary risks, and leverage conflicts of interest to the detriment of consumers and small businesses. Failure to enact this legislation will also undermine our system of holding company supervision, threatening financial stability, the groups said in their letter.
"Time is of the essence," said Camden Fine, ICBA president and CEO. "The FDIC's moratorium on ILC applications by commercial firms expires on January 31, 2008. The clock is rapidly winding down on Congress's opportunity to act on this issue. We need them to act now."
Read the entire letter, including the list of signing organizations, at www.icba.org.