ICBA said General Motors Financial Bank’s application for FDIC insurance threatens the Deposit Insurance Fund and doesn’t serve the convenience and needs of the community.
Details: In a letter to the Chicago Regional FDIC, ICBA said it strongly opposes GM’s application because:
Industrial loan companies owned by commercial parent companies cannot function as neutral arbiters of credit due to the inherent conflict of interest at the heart of their business model.
ILCs pose an undue risk of losses to the DIF and add unnecessary systemic risks that harm the entire banking system.
Closing the Loophole: ICBA details the evolution of the ILC charter in a comprehensive white paper. ICBA will continue to advocate for legislation that requires companies that acquire an ILC to be subject to the same consolidated supervision by the Federal Reserve as any other bank holding company.
More Scrutiny: ICBA’s Mickey Marshall recently told The Banker (subscription required) that traditional lenders are worried about the implications of larger tech firms such as Amazon or Meta effectively entering the banking space through the back door and getting access to spending habits data.