Following the FDIC’s approval of the formation of Thrivent Bank, a new industrial loan company based in Utah, ICBA reiterated its strong opposition to the ILC loophole.

New ILC Charter: The FDIC approved the deposit insurance application submitted by Thrivent Financial for Lutherans (TFL) of Minneapolis to create Thrivent Bank, a newly chartered ILC headquartered in Salt Lake City. The FDIC board also approved a companion application filed by TFL to merge Thrivent Federal Credit Union in Appleton, Wis., into Thrivent Bank.

ICBA Response: In a national news release, ICBA said:

  • The FDIC should deny ILC applications to prevent firms from skirting full regulatory oversight and violating U.S. policy separating banking and commerce.

  • The ILC charter allows applicants’ parent companies to own and operate FDIC-insured banks while avoiding Bank Holding Company Act regulations.

  • The commercial activities of ILC applicants create conflicts of interest and pose risks to the Deposit Insurance Fund, the financial system, and consumer privacy.

  • The handful of states granting ILC charters shouldn’t dictate U.S. banking policy or serve as safe havens for companies that are unwilling to comply with bank regulations.

Level Playing Field: “Any company that wishes to own a full-service bank should be subject to the same restrictions and supervision that apply to any other bank holding company,” ICBA President and CEO Rebeca Romero Rainey said.

ILC Loophole: ICBA has detailed the evolution of the ILC charter in a comprehensive white paper and strongly supports legislation to close the ILC loophole. The Close the Shadow Banking Loophole Act (S. 3538), introduced by Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Sen. John Kennedy (R-La.), would require companies that acquire an ILC to be subject to the same consolidated supervision by the Federal Reserve as any other bank holding company.

Grassroots: Community bankers can use ICBA’s Be Heard grassroots action center to urge their senators to co-sponsor the Close the Shadow Banking Loophole Act.