Washington, D.C. (Sept. 6, 2023) — The Independent Community Bankers of America (ICBA) today asked the National Credit Union Administration to provide information on whether Rakuten Inc. has applied for a federal credit union charter or for insurance under the agency’s Share Insurance Fund. In a Freedom of Information Act request, ICBA noted that unlike federal banking regulators, the NCUA does not maintain public databases of organizations and entities that have applied for federal insurance or a national charter.

“After repeatedly applying for an industrial loan company charter to limit its regulatory oversight, Rakuten is now reportedly seeking a charter with the National Credit Union Administration, which has continuously sought to expand the powers of the tax-exempt industry it is charged with regulating without adequately examining compliance with consumer protection directives,” ICBA President and CEO Rebeca Romero Rainey said today. “ICBA and the nation’s community banks urge the credit union regulator to publicly weigh in on whether Rakuten is seeking a credit union charter — information that federal banking regulators make public as a matter of course.”

ICBA has strongly opposed Rakuten’s repeated applications for FDIC deposit insurance as an industrial loan company, which would allow the "the Amazon of Japan's" subsidiary to skirt regulatory oversight and violate U.S. policy separating banking and commerce. As ICBA has detailed in a comprehensive white paper, the ILC charter allows applicants’ parent companies to avoid the legal restrictions of the Bank Holding Company Act, while the commercial activities of ILC applicants like Rakuten pose risks to the FDIC's Deposit Insurance Fund and the financial system more broadly.

Meanwhile, the NCUA has presided over a credit union industry that has strayed from its founding mission of serving people of modest means with a common bond while leveraging taxpayer-funded subsidies to acquire local community banks — with each transaction displacing a trusted source of credit, further consolidating the banking industry, and increasing the portion of the industry exempt from Community Reinvestment Act oversight. ICBA has repeatedly called on Congress to hold hearings on the credit union tax exemption and the NCUA’s increasingly permissive oversight, request a Government Accountability Office study on the credit union industry, and consider an “exit fee” on these acquisitions to capture the value of the tax revenue lost once the acquired bank’s business activity becomes tax-exempt.

ICBA looks forward to receiving the NCUA’s response to its FOIA request to shed light on Rakuten’s efforts to obtain a federal charter.

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute roughly 99 percent of all banks, employ nearly 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding nearly $5.9 trillion in assets, over $4.9 trillion in deposits, and more than $3.5 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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