ICBA, state groups urge FDIC to reconsider Edward Jones ILC application

ICBA and 38 state banking associations urged the FDIC to reconsider its decision to approve Edward Jones’s deposit insurance application to form a Utah-chartered industrial loan company.

Details: In the letter to the FDIC, the groups said Edward Jones's network of more than 16,000 physical locations across North America could function as de facto bank branches for deposit-gathering activities, allowing Edward Jones to siphon deposits away from community banks while avoiding regulatory requirements.

Background: A loophole in the Bank Holding Company Act allows nonbank 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.

ICBA Advocacy:

• ICBA has repeatedly urged the FDIC to pause consideration of pending ILC applications until it has issued rules or otherwise provided greater transparency on ILC filings.

• 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.

• ICBA last fall called on the FDIC 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 continues to strongly support the Close the Shadow Banking Loophole Act introduced by Senate Banking Committee members John Kennedy (R-La.) and Andy Kim (D-N.J.) to close the ILC loophole.