ICBA called on the FDIC to deny pending deposit insurance applications from industrial loan companies, citing the outsized risks ILCs pose to the Deposit Insurance Fund, financial stability, and consumers.

ICBA Letter: In a letter to the FDIC board following a September 2022 letter from nine U.S. senators expressing support for the ILC charter, ICBA said:

  • The agency should deny applications from GM Financial Bank, Ford Credit Bank, and Rakuten Bank America.

  • The FDIC has the statutory authority to reject deposit insurance applications when there is substantial evidence that a prospective depository institution fails to satisfy one or more of the factors specified in the Federal Deposit Insurance Act.

  • There is substantial evidence that the pending ILCs fail to satisfy at least two of the factors outlined in the FDI Act because they create an undue risk to the DIF and are unlikely to satisfactorily serve the convenience and needs of the community.

Background: The ILC loophole allows commercial and tech companies to own or acquire ILCs chartered in a handful of states without being subject to federal consolidated supervision. In a comprehensive white paper, ICBA details the transformation of the ILC charter into the fashionable charter of choice for firms seeking to benefit from the federal safety net while avoiding oversight.