FDIC Approval of Ford, GM Industrial Loan Companies Threatens Banking System Stability

Washington, D.C. (Jan. 22, 2026) — The Independent Community Bankers of America (ICBA) today expressed serious concern with the Federal Deposit Insurance Corp.’s approval of industrial loan company applications from Ford and General Motors, citing the systemic risk the ILC regulatory loophole poses to the banking system by allowing financial institutions to receive federal deposit insurance while avoiding full regulatory oversight.

“When massive commercial-financial conglomerates exploit the ILC loophole, they inject unnecessary systemic risk into the banking system,” ICBA President and CEO Rebeca Romero Rainey said. “The FDIC has a statutory duty to reject applications that pose undue risk, and the ILC model is not the innovation proponents claim — it’s a relic of a loophole dating to the 1980s that blurs the line between banking and commerce. If a company wants to own a bank, it must play by the same rules as everyone else, and anything less is regulatory arbitrage at taxpayer risk.”

Following the 2008 failure of General Motors’ ILC and its subsequent $17 billion taxpayer-funded bailout, ICBA has repeatedly responded with detailed comment letters urging the FDIC to oppose ILC applications given the risks they pose to consumers due to their exemption from consolidated supervision by the Federal Reserve Board under the Bank Holding Company Act and their ownership by nonfinancial parent companies.

In a recent white paper, ICBA details why Congress should close the ILC loophole and the FDIC should delay final decisions on pending ILC deposit insurance applications until all stakeholder feedback is fully incorporated. As the white paper discusses, a loophole in the Bank Holding Company Act allows commercial and fintech companies to own or acquire ILCs chartered in a handful of states without being subject to federal consolidated supervision, leaving a dangerous gap in safety and soundness oversight and introducing unnecessary systemic risk into the banking system.

With a number of ILC applications for deposit insurance pending before the FDIC, ICBA recently called on the agency to reject applications of ILCs that pose undue risks to the Deposit Insurance Fund and that fail to serve the convenience and needs of their communities.

ICBA will continue working with policymakers to address community bank concerns with the ILC loophole.

About ICBA
The Independent Community Bankers of America® has one mission: to create and promote an environment where community banks flourish. We power the potential of the nation’s community banks through effective advocacy, education, and innovation.

As local and trusted sources of credit, America’s community banks leverage their relationship-based business model and innovative offerings to channel deposits into the neighborhoods they serve, creating jobs, fostering economic prosperity, and fueling their customers’ financial goals and dreams. For more information, visit ICBA’s website at icba.org.