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Following the FDIC’s approval of the formation of Thrivent Bank, a new industrial loan company based in Utah, ICBA reiterated its strong opposition to the ILC loophole.
New ILC Charter: The FDIC approved the deposit insurance application submitted by Thrivent Financial for Lutherans (TFL) of Minneapolis to create Thrivent Bank, a newly chartered ILC headquartered in Salt Lake City. The FDIC board also approved a companion application filed by TFL to merge Thrivent Federal Credit Union in Appleton, Wis., into Thrivent Bank.
ICBA Response: In a national news release, ICBA said:
The FDIC should deny ILC applications to prevent firms from skirting full regulatory oversight and violating U.S. policy separating banking and commerce.
The ILC charter allows applicants’ parent companies to own and operate FDIC-insured banks while avoiding Bank Holding Company Act regulations.
The commercial activities of ILC applicants create conflicts of interest and pose risks to the Deposit Insurance Fund, the financial system, and consumer privacy.
The handful of states granting ILC charters shouldn’t dictate U.S. banking policy or serve as safe havens for companies that are unwilling to comply with bank regulations.
Level Playing Field: “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,” ICBA President and CEO Rebeca Romero Rainey said.
ILC Loophole: ICBA has detailed the evolution of the ILC charter in a comprehensive white paper and strongly supports legislation to close the ILC loophole. The Close the Shadow Banking Loophole Act (S. 3538), introduced by Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Sen. John Kennedy (R-La.), would require companies that acquire an ILC to be subject to the same consolidated supervision by the Federal Reserve as any other bank holding company.
Grassroots: Community bankers can use ICBA’s Be Heard grassroots action center to urge their senators to co-sponsor the Close the Shadow Banking Loophole Act.