ICBA said it is extremely concerned with the FDIC's new proposed rule codifying agency rules on industrial loan company parent companies and approval of two new ILC deposit insurance applications. Following Tuesday's vote on the proposed rule, the FDIC approved applications from Square Financial Services Inc. and Nelnet Bank—the first ILC deposit insurance applications to be approved since 2006.
In a national news release, ICBA called on the FDIC to refrain from approving any additional ILC applications until the proposed rulemaking is finalized and hold a hearing on each remaining application. "The ILC loophole in the Bank Holding Company Act allows commercial interests to own full-service banks, avoid consolidated supervision, and threaten the financial system," ICBA President and CEO Rebeca Romero Rainey said.
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, 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, as detailed in a white paper issued last year, including by supporting legislation to close the ILC loophole.