Leach Blasts Big Bank Lobby on ILCs
Former House Banking Committee chairman Jim Leach (R-Iowa) got on the case of the Financial Services Roundtable recently, chiding them in a four-page letter for opposing efforts to prohibit retailers and other commercial companies from entering the banking business through ownership of industrial loan companies (ILCs).
According to American Banker, Rep. Leach-a veteran of the banking and commerce wars fought in the Gramm-Leach-Bliley debates-told the Roundtable's president Steve Bartlett, a former Texas congressman, "I am frankly astonished … that your member companies oppose any efforts to restrict the ownership of ILCs to financial companies." He went on to write, "I … have frankly thought that financial institutions, which generally stand out as the most pragmatic segment in the American enterprise, have been ironically naïve about the ramifications for themselves of conglomerating commercial firms with financial companies." Bartlett responded to American Banker that he does not see ILCs as a banking and commerce issue, as ILCs "have existed for 100 years, and they are a part of our financial marketplace."
What about thrifts? Also missing in action is America's Community Bankers, which represents thrift institutions. The issues presented by the ILC ownership debate are the same that were presented by the unitary thrift holding company loophole. That loophole was closed by the Gramm-Leach-Bliley Act, and commercial firms may no longer acquire thrift institutions. While ACB defended commercial ownership of thrifts during the GLBA debate, now that the landscape has changed, we would think thrift institution interests are not served by allowing ILCs to have a leg up on the thrift charter.