ICBA Statement on ILC, Brokered Deposit Rules

Washington, D.C. (Dec. 15, 2020) — Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on today's Federal Deposit Insurance Corp. final rule on industrial loan companies.

"While ICBA and the nation’s community banks acknowledge the efforts of the FDIC to strengthen the supervision of industrial loan company parent companies, the final rule approved today fails to ensure the safety and soundness of these companies. Today's final rule stops short of establishing consolidated capital requirements that would ensure ILC parents are a source of strength for their subsidiaries.

"The ILC charter has evolved into the fashionable charter of choice for companies seeking to benefit from the federal safety net while avoiding oversight. Commercial firms should not be permitted to own a bank or ILC even if it is subject to enhanced supervision and regulation, which violates the longstanding separation of banking and commerce and leaves dangerous gaps in oversight. Ultimately, Congress should close this loophole by subjecting ILC holding companies to the Bank Holding Company Act and the consolidated supervision of the Federal Reserve.

"Further, ICBA commends the FDIC for narrowing the definition of 'deposit broker' to allow for more fintech and other relationships that help community banks attract and retain deposits. ICBA also commends the FDIC for its new rules on interest rate restrictions. Although the final rules don’t go as far as ICBA would like, they are an improvement from the proposal.

"ICBA looks forward to continuing to work with the FDIC and Congress to close the ILC loophole, maintain the separation of banking and commerce, and support deposit services."

About ICBA

The Independent Community Bankers of America creates and promotes an environment where community banks flourish. ICBA is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education, and high-quality products and services.

With nearly 50,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 700,000 Americans and are the only physical banking presence in one in three U.S. counties. Holding more than $5 trillion in assets, over $4.4 trillion in deposits, and more than $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org.

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