Senate committee chairman: ILC loophole a top 2024 priority

Senate Banking Committee Chairman Sherrod Brown (D-Ohio) included ICBA-supported legislation to close the industrial loan company loophole in his list of priorities for the coming year.

Legislative Outlook: In a memo on the final year of the 118th Congress, Brown cited the Close the Shadow Banking Loophole Act as priority legislation. Introduced with Sen. John Kennedy (R-La.) — and co-sponsored by Sens. Mike Braun (R-Ind.), Bob Casey (D-Pa.), Chris Van Hollen (D-Md.), and Roger Wicker (R-Miss.) — the bill 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.

ICBA Advocacy: ICBA last month expressed strong support for the Senate bill in a national news release and a joint letter to the co-sponsors, citing the need to ensure any company that wishes to own a full-service bank is subject to the same restrictions and supervision that apply to any other bank holding company.

Background: The ILC loophole allows large technology companies like Japanese e-commerce firm Rakuten and other commercial firms to own and operate FDIC-insured banks while skirting federal regulations that apply to other banks.

More: In a comprehensive white paper, ICBA details the transformation of the ILC charter into the fashionable charter of choice for firms seeking to benefit from the federal safety net while avoiding oversight.