ICBA said the application for FDIC insurance from the automaker Stellantis threatens the Deposit Insurance Fund and doesn’t serve the convenience and needs of the community.
Details: In a letter to the San Francisco Regional FDIC, ICBA said it strongly opposes the Stellantis 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.
Undiversified Business Model: ICBA also noted that the bank’s focus on auto loans and related financing, tied exclusively to Stellantis customers and dealers, leaves it vulnerable to downturns in the auto market. ICBA recently opposed a General Motors ILC application for similar reasons.
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.
