ICBA opposes PayPal’s ILC application 

ICBA expressed strong opposition to PayPal’s application to form an industrial loan company, saying the FDIC should not allow nonbank firms to benefit from the federal safety net while avoiding prudential regulation and supervision. 

Details: In a national news release, ICBA President and CEO Rebeca Romero Rainey said, “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.”  

Background: 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.   

Recent ICBA Advocacy: 

• ICBA last month published a new white paper detailing why policymakers should close the ILC loophole, which allows ILCs and their parent companies to skirt regulatory oversight.   

• ICBA in September told the FDIC that it has a statutory duty to reject ILC applications that pose undue risks to the Deposit Insurance Fund and fail to serve the convenience and needs of their community. 

• Earlier this year, ICBA expressed opposition to several ILC applications, including from Nissan, Stellantis, and General Motors, and detailed the issue in an American Banker op-ed (subscription required).   

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