ICBA Statement on FDIC Industrial Loan Company Proposal

ICBA Press Release Banner 2020

Washington, D.C. (
March 18, 2020)—Independent Community Bankers of America® (ICBA) President and CEO Rebeca Romero Rainey issued this statement on the Federal Deposit Insurance Corp.'s proposed rule on industrial loan companies.

“ICBA is extremely concerned about the FDIC proposed rulemaking on the parent companies of industrial loan companies and its approval of ILC deposit insurance applications from Square Financial Services Inc. and Nelnet Bank. 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. Conditions imposed by the FDIC, whether in the approvals or the proposed rule, are insufficient to alleviate these concerns.

"To mitigate risks to the financial system, ICBA continues to call on the FDIC to refrain from approving any additional deposit insurance applications submitted by ILCs until the proposed rulemaking is finalized. Further, the FDIC should hold a hearing on each of the remaining ILC applications and require applicants' owners and affiliates to commit to divesting their commercial interests and meeting the same restrictions as community bank holding companies.

"In a comprehensive white paper issued last year, ICBA fully detailed the transformation of the ILC charter into the fashionable charter of choice for fintech and Big Tech firms seeking to benefit from the federal safety net while avoiding legal restrictions and company oversight.

"Recognizing the dangers of mixing banking and commerce, both the FDIC and Congress have previously placed moratoriums on the use of ILCs. ICBA continues to strongly support legislation that would permanently close the ILC loophole. Introduced by Senate Banking Committee member John Kennedy (R-La.), the Eliminating Corporate Shadow Banking Act of 2019 would support a safe and sound financial system, level the regulatory playing field between ILCs and community banks, and maintain the important separation of banking and commerce.

"ICBA looks forward to continuing to work with all concerned policymakers to close the ILC loophole and maintain the separation of banking and commerce."


About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ nearly 750,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, nearly $4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.


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