Our Position

Defending the Bank Charter


  • Corporate conglomerates or other companies engaged in commercial activities should not be allowed to own full-service or special purpose banks in violation of the longstanding U.S. policy of maintaining the separation of banking and commerce.

  • Congress should close the ILC loophole and stop the special purpose national bank charters because they not only threaten the financial system but create an uneven playing field for community banks.

  • The OCC should have explicit statutory authority from Congress before issuing any special purpose national bank charter for financial technology (fintech) companies. Any new federal charter should be subject to the same standards of safety, soundness, and fairness as other federally chartered institutions.

  • The Federal Reserve Banks should conduct rigorous due diligence of state chartered special purpose depository institutions (SPDIs) before granting them access to the payments system.


Maintain the Separation of Banking and Commerce. The long-standing policy prohibiting affiliations or combinations between banks and non-financial commercial firms (such as Wal-Mart, Amazon, and Google) has served our nation well and was reaffirmed by the Gramm-Leach-Bliley Act (GLBA). Allowing large retail or technology conglomerates to own banks violates the U.S. policy of maintaining the separation of banking and commerce, jeopardizes the impartial allocation of credit, creates conflicts of interest, a dangerous concentration of commercial and economic power, and unwisely extends the federal safety net to commercial interests.

ICBA was the first national bank trade association to oppose Wal-Mart’s ILC application in 2005 and continues to exercise national leadership on banking and commerce separation with its opposition to the deposit insurance applications of Square Financial Services, Inc., Nelnet Bank, GM Financial, and Rakuten Bank America. The Square and Nelnet applications were approved by the FDIC in 2020 but the applications of Rakuten Bank America and GM Financial are still pending. All these applicants have holding companies and affiliates that engage in diverse, non-financial, commercial activities and chose the unique Utah ILC charter to avoid the legal prohibitions and restrictions on commercial activities under the Bank Holding Company Act.

ICBA believes that Rakuten, GM Financial Bank, and all other applicants for deposit insurance through ILCs should be subject to the same restrictions and supervision that apply to any bank holding company of a community bank. The FDIC rules for parent companies of ILCs do not provide the same level of supervision that bank holding companies are subject to under the Bank Holding Company Act. Congress should close the ILC loophole because it threatens the financial system and creates an uneven playing field for community banks.

Congressional Authority is Needed Before the OCC Can Issue Special Purpose Charters. The OCC should have specific legal authority from Congress before issuing a fintech charter. It would be a violation of Section 2 of the Federal Reserve Act for the OCC to approve a national bank charter to a non-depository institution. Section 2 is clear that every national bank must be a member of the Federal Reserve System and every member of the Federal Reserve System must be an insured bank.

Special Purpose Depository Institutions (SPDIs) Present Novel and Heightened Risk. The Reserve Banks should conduct a significantly greater degree of due diligence in assessing “novel charter” applicants such as SPDIs for master accounts and access to the payments system. Such applicants should be subject to standards that are as rigorous as those applicable to insured depository institutions or BHCs under federal banking law, including standards for capital, liquidity, risk management, cybersecurity, anti-money laundering, consumer protection, affiliations and affiliate transactions and other prudential requirements. Furthermore, to avoid the possibility of regulatory arbitrage, the Federal Reserve Board should adopt a uniform policy for Federal Reserve Banks that sets forth appropriate criteria for granting a state-chartered or a federally chartered special purpose bank access to the payment system.

Staff Contact: Chris Cole and Deborah Matthews Phillips

Staff Contact

Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC