Bank Policy Institute Calls on FDIC to Apply Regulatory Safeguards to ILCs to Protect Consumers & Mitigate Risk to Economy
As a result of a statutory loophole, ILCs and ILC parent companies remain free from consolidated and comprehensive supervision and, therefore, pose unique risks to the economy and the
"If BigTech and multinational commercial firms want to begin offering payments and other financial products and benefit from a federal safety net - a practice that represents a complete reversal of
While ILCs offer banking products and services that are functionally indistinguishable from those offered by commercial banks, these companies and their parent companies are not subject to the same consolidated federal supervision and regulation framework as bank holding companies and savings and loan holding companies. ILCs were established in the early 1900s to make small loans to industrial workers, but statutory loopholes created in 1987 through the passage of the Competitive Equality in Banking Act enabled large commercial firms and technology companies to acquire
In addition to establishing robust prudential safeguards, BPI's comment letter recommends that ILC parent companies comply with established financial privacy and information security requirements across all of their financial and non-financial affiliates and activities, that ILC parent companies should have a program for identifying and limiting covered transactions between the ILC and the parent company or the ILC and other affiliates, and that the
Read letter here https://bpi.com/wp-content/uploads/2020/06/BPI-ILC-NPR-Parent-Companies-of-Industrial-Banks-and-Industrial-Loan-Companies-2020.06.30.pdf
Read letter here https://bpi.com/press-releases/consumer-civil-rights-groups-industry-urge-fdic-halt-approval-of-industrial-bank-applications-close-ilc-loopholes-first/
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