Washington, D.C. (Nov. 12, 2025) — The Independent Community Bankers of America (ICBA) today released a comprehensive white paper detailing why policymakers should close a legal loophole that allows industrial loan companies and their parent companies to skirt regulatory oversight, endangering consumers and the economy.
In “Closing the Industrial Loan Company Loophole: An Urgent Priority to Prevent Systemic Risk and Consumer Harm,” ICBA calls on Congress to close the loophole and on the Federal Deposit Insurance Corporation to delay final decisions on pending ILC deposit insurance applications until all stakeholder feedback is fully incorporated. ICBA today delivered the white paper to the FDIC as well as House and Senate offices.
“The industrial loan company loophole allows commercial interests to own full-service banks while avoiding key regulations and consolidated supervision by the Federal Reserve — threatening the financial system and creating an uneven regulatory playing field,” ICBA President and CEO Rebeca Romero Rainey said today. “Any company that wishes to own a full-service bank should be subject to the same restrictions and supervision that apply to any other bank holding company. To support a safe and sound financial system and to maintain the separation of banking and commerce, the FDIC should delay any decision on pending ILC applications and Congress should close the loophole for good.”
As ICBA’s white paper recounts, 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. Further, commercial ownership of ILCs — which are the functional equivalent of full-service banks — violates the longstanding U.S. policy of maintaining the separation of banking and commerce, which has been fundamental to U.S. prosperity.
With a troubling number of new ILC applications for deposit insurance pending before the FDIC, ICBA recently called on the agency to reject the applications of ILCs that pose undue risks to the Deposit Insurance Fund and that fail to serve the convenience and needs of their communities. Supporting a level regulatory playing field to ensure financial policies do not erode the competitive landscape is a key priority of ICBA’s “Repair, Reform, and Thrive” plan and open letter to the 119th Congress.
“Closing the Industrial Loan Company Loophole: An Urgent Priority to Prevent Systemic Risk and Consumer Harm” is available on the ICBA website.
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.