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ICBA expressed strong support for the introduction of Senate legislation to close the industrial loan company loophole.
Background: The ILC loophole allows large technology companies like Japanese e-commerce firm Rakuten and other commercial firms to own and operate FDIC-insured banks while skirting federal regulations that apply to other banks.
New Legislation: Introduced by Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Sen. John Kennedy (R-La.) — and co-sponsored by Sens. Mike Braun (R-Ind.), Bob Casey (D-Pa.), Chris Van Hollen (D-Md.), and Roger Wicker (R-Miss.) — the Close the Shadow Banking Loophole Act 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.
ICBA Response: In a national news release, ICBA President and CEO Rebeca Romero Rainey called on lawmakers to advance the legislation to ensure any company that wishes to own a full-service bank is subject to the same restrictions and supervision that apply to any other bank holding company. ICBA also expressed support in a joint letter to the co-sponsors, with ICBA’s support for the bill covered by Politico and included in the Senate Banking Committee’s announcement of the bill.
More: 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.