Nissan is latest automaker to apply for ILC charter

Nissan this week became the latest automaker to apply to form an industrial loan company in Utah.

Details: Nissan Motor Acceptance Company—the financial services arm of Nissan North America—submitted an application to the FDIC and the Utah Department of Financial Institutions to form an ILC based in Salt Lake City. Nissan said the proposed ILC would focus on commercial financing for dealerships.

Background: The ILC loophole allows commercial companies to own and operate FDIC-insured banks while skirting federal regulations that apply to other banks.

What It Means for Community Banks: ICBA has consistently opposed attempts by commercial companies to obtain ILC charters, noting they would violate the separation of banking and commerce and threaten the Deposit Insurance Fund.

ICBA Opposition to ILCs:

  • ICBA recently expressed opposition to ILC applications by Stellantis and General Motors, saying they pose risks to the DIF and don’t serve the convenience and needs of the community.

  • In a recent American Banker op-ed (subscription required), ICBA said maintaining the separation between banking and commerce is a crucial safeguard that policymakers should strengthen by repealing the ILC loophole.

Closing the Loophole: 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. ICBA will continue to advocate for legislation that subjects companies that acquire an ILC to the same consolidated supervision by the Fed as any other bank holding company.

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