ICBA urges senators to co-sponsor bill to close ILC loophole

ICBA urged senators to co-sponsor ICBA-advocated legislation to permanently close the industrial loan company loophole.

Bill Details: The Close the Shadow Banking Loophole Act (S. 3538), introduced by Senate Banking Committee Chairman Sherrod Brown (D-Ohio) and Sen. John Kennedy (R-La.), would require companies that acquire an ILC to be subject to the same consolidated supervision by the Federal Reserve as any other bank holding company

At Issue: ICBA noted in a letter to senators that while the FDIC recently approved the application of Thrivent Bank—a new ILC headquartered in Utah—Congress is working to close the ILC loophole. In a national news release following ICBA’s approval of the formation of Thrivent Bank last week, ICBA expressed its opposition and said Congress should pass S. 3538.

Background: In a comprehensive white paper, ICBA has detailed the evolution of the ILC charter, which allows parent companies to skirt regulatory oversight and violate U.S. policy separating banking and commerce.

GM Withdrawal: General Motors recently withdrew its ICBA-opposed application for deposit insurance, suspending its bid to form an ILC. Following the news, ICBA Senior Vice President of Congressional Relations Susan Sullivan told American Banker that GM’s withdrawal should deter other companies from pursuing similar charters.

Grassroots: Community bankers can use ICBA’s Be Heard grassroots action center to urge their senators to co-sponsor the Close the Shadow Banking Loophole Act.