ICBA expressed opposition to the deposit insurance application of Interactive Bank, which is chartered in Utah as an industrial loan company. In a comment letter to the FDIC, ICBA said if parent company IBG wants to engage in both brokerage and banking services, it could have registered as a bank holding company.
ICBA said IBG is taking advantage of the ILC loophole because its wants to avoid consolidated supervision and regulation by the Federal Reserve under the Bank Holding Company Act. If brokerage companies want to engage in the business of banking, they should be subject to the same supervision and regulation as banks, ICBA said.
ICBA recently released a summary of the Eliminating Corporate Shadow Banking Act of 2019, which would close the ILC loophole.