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General Motors withdrew its ICBA-opposed application for deposit insurance, suspending its bid to form an industrial loan company.
Details: GM said the Utah Department of Financial Institutions this month approved its application to form GM Financial Bank, which the automaker filed in December 2020. GM said it would refile with the FDIC and UDFI.
Reaction to GM Withdrawal: In American Banker, ICBA Senior Vice President of Congressional Relations Susan Sullivan reiterated ICBA's concerns with the ILC charter—which allows parent companies to skirt regulatory oversight and violate U.S. policy separating banking and commerce—and said GM’s withdrawal should deter other companies from pursuing similar charters.
ICBA Opposition: ICBA in 2021 called on the FDIC to reject GM Financial Bank's deposit insurance application as an ILC. In a letter to the FDIC, ICBA cited GM's previous failed incursion into banking, which led to the collapse of GMAC, contributed to the 2008 financial crisis, and required three rounds of taxpayer-funded bailouts to save GM.
Thrivent Approval: GM’s announcement came after the FDIC last week approved the formation of Thrivent Bank as an ILC. In a national news release following that announcement, ICBA expressed its opposition and said Congress should pass the Close the Shadow Banking Loophole Act (S. 3538) to require companies that acquire an ILC to be subject to the same consolidated supervision by the Federal Reserve as any other bank holding company.
More: ICBA has detailed the evolution of the ILC charter in a comprehensive white paper.
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.