Washington, D.C. (Jan. 29, 2026) — The Independent Community Bankers of America (ICBA) today expressed its strong support for bipartisan legislation to close the industrial loan company (ILC) loophole, which allows commercial companies to own full-service banks without full regulatory oversight.
A loophole in the Bank Holding Company Act allows commercial and fintech companies to own or acquire ILCs chartered in a handful of states without being subject to federal consolidated supervision, leaving a dangerous gap in safety and soundness oversight and introducing unnecessary systemic risk into the banking system. Introduced by Senate Banking Committee members John Kennedy (R-La.) and Andy Kim (D-N.J.), the Close the Shadow Banking Loophole Act would close the ILC loophole to mitigate risks to consumer privacy, the financial system, and the economy.
“ICBA and the nation’s community banks thank Sens. Kennedy and Kim for introducing legislation to permanently close the industrial loan company loophole,” ICBA President and CEO Rebeca Romero Rainey said. “Allowing large commercial and technology firms to own full-service banks while skirting regulatory oversight threatens the financial system, endangers consumers, and creates an uneven regulatory landscape. The Close the Shadow Banking Loophole Act will 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.”
In a recent white paper, ICBA details why Congress should close the ILC loophole and the FDIC should delay final decisions on pending ILC deposit insurance applications until all stakeholder feedback is fully incorporated. With a number of ILC applications for deposit insurance pending before the FDIC, ICBA recently called on the agency to reject applications of ILCs that pose undue risks to the Deposit Insurance Fund and that fail to serve the convenience and needs of their communities.
ICBA and community bankers will continue working with policymakers to advance this much-needed legislation to preserve the separation of banking and commerce and ensure any company that wishes to own a full-service bank is subject to the same rules.
About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.
As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.