ICBA: Impose a Two-Year Moratorium on Deposit Insurance for ILC Charters

Sep 14, 2017
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Washington, D.C (Sept. 14, 2017)—The Independent Community Bankers of AmericaÒ (ICBA) today called on the Federal Deposit Insurance Corporation (FDIC) to institute a two-year moratorium on approving deposit insurance applications for industrial loan corporations (ILCs). The pause would allow Congress sufficient time to determine whether it wants to maintain the separation of commerce and banking by closing the ILC loophole permanently.

“If the FDIC does not immediately impose a two-year moratorium on ILC deposit insurance applications, the consequences to our financial system could be enormous,” ICBA President and CEO Camden Fine wrote FDIC Chairman Martin Gruenberg. “Without such a moratorium, our financial system will become even more concentrated and subject to tremendous systemic risks that no banking regulator would be able to supervise and control.”

ICBA’s request for a moratorium follows SoFi Bank’s application to the FDIC for deposit insurance for a new ILC and Square’s announced plans to apply for deposit insurance, also as an ILC. With more than 4,000 fintech firms actively engaged in financial activities, including PayPal and Lending Club, the ILC industry could double in size in less than a year through new ILCs formed by huge technology companies. The integration of these technology and banking firms would not only result in an enormous concentration of financial and technological assets, but also pose conflicts of interest and privacy concerns to the banking system.

The FDIC previously instituted moratoriums on ILC deposit insurance applications in 2006 and 2007, when Walmart and Home Depot submitted charter applications. ICBA was the first national bank trade association to speak out against Walmart’s deposit-insurance application, noting that it violated U.S. policy, jeopardized the impartial allocation of credit, created conflicts of interest and a dangerous concentration of commercial and economic power, and unwisely extended the federal safety net to commercial interests. 

ICBA will continue working with the FDIC and Congress to mitigate the potential harm of ILC charters to the nation’s financial system.

About ICBA
The Independent Community Bankers of America®, the nation’s voice for more than 5,700 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit ICBA’s website at