FOR IMMEDIATE RELEASE
ICBA Tells Congress ‘It’s Time to Close the ILC Loophole’
Washington, D.C. (July 12, 2006)—The Independent Community Bankers of America (ICBA) today urged Congress to close the loophole in the law that allows commercial firms to own industrial loan corporations (ILCs).
"The flood of new applications for ILC charters threatens to eliminate the historic separation of banking and commerce and undermine the system of holding company supervision, harming consumers and threatening financial stability," said Terry J. Jorde, ICBA chairman and president and CEO of CountryBank USA, Cando, N.D. Jorde testified at the House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing entitled "ILCs-A Review of Charter, Ownership, and Supervision Issues."
"Each time Congress has been confronted with loopholes like the one the committee is addressing today it has reaffirmed the separation of banking and commerce and the importance of holding company supervision. Congress closed the unitary thrift holding company loophole in 1999 and closed the non-bank bank loophole in 1987. It is now time to close the ILC loophole," Jorde said.
ICBA has been the leading advocate for maintaining the separation of banking and commerce by closing the ILC loophole that allows commercial enterprises to own a bank. A record number of ILC applications from commercial companies are pending before the FDIC, including Wal-Mart, Home Depot, Berkshire Hathaway, and the Blue Cross/Blue Shield Association, among several others.
ICBA strongly supports two proposed congressional solutions. One by Rep. Jim Leach (R-Iowa) would place ILC holding companies under Federal Reserve supervision under the Bank Holding Company Act, prohibit ILC ownership by commercial firms and require commercial companies that own ILCs to divest them within five years. The other, by Rep. Paul Gillmor (R-Ohio) and Rep. Barney Frank (D-Mass.) would prohibit commercial firms from forming or acquiring ILCs after June 1, 2006, give the FDIC supervisory authority over companies that own ILCs, and limit activities of ILCs acquired by commercial companies between October 1, 2003 and June 1, 2006.
View the ICBA testimony at www.icba.org.