The FDIC proposed new rules to codify the agency's capital, liquidity and source-of-strength requirements for industrial loan company parent companies. The agency's board of directors also said it would decide on two ILC deposit insurance applications, though it hadn't released its decision as of Tuesday night.
FDIC Chairman Jelena McWilliams said Congress expressly authorized deposit insurance for ILCs and, thus, the agency is obligated to consider their applications as it would any other. She said questions about mixing banking and commerce are best addressed by Congress, acknowledging ICBA-advocated legislation that would permanently close the ILC loophole.
In letters to the FDIC this week, ICBA and other groups urged the agency to refrain from approving ILC deposit insurance applications until it finalized the proposed rule. ICBA also called on the agency to hold a hearing on each pending ILC application, expressing particular concern with ILCs owned by companies engaged in substantial commercial activities.
House Financial Services Committee Chairman Maxine Waters (D-Calif.) on Friday separately urged the FDIC to hold off until it has received and considered feedback on the forthcoming proposal.
ICBA will continue to lead the opposition to mixing banking and commerce through exploitation of the ILC loophole, which it detailed in a white paper issued last year.