ICBA opposes resubmitted Rakuten ILC application

ICBA called on the FDIC to deny Rakuten Bank America’s resubmitted federal deposit insurance application and urged Congress to permanently close the industrial loan company loophole.

In a comment letter, ICBA said the application would allow the "the Amazon of Japan's" subsidiary to skirt regulatory oversight and violate U.S. policy separating banking and commerce.

Like other ILC applications, Rakuten Bank America is applying as an ILC rather than a commercial bank so its parent companies may avoid the legal restrictions of the Bank Holding Company Act, ICBA wrote.

ICBA also said the global reach of Rakuten's commercial activities—which include an online marketing business and even its own professional baseball team—pose risks to the FDIC's Deposit Insurance Fund and the financial system more broadly.

In a comprehensive white paper released last year, ICBA detailed the transformation of the ILC charter into the fashionable charter of choice for financial firms seeking to benefit from the federal safety net while avoiding oversight.