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Letter Supporting "Close The ILC Loophole" Act
Letter from leading bank and credit union trade associations and consumer groups supporting a bill to close the industrial loan company (ILC) loophole. The ILC loophole allows Big Tech and other nonbank companies to offer financial products and services without complying with the safeguards and prudential oversight regulations required of bank holding companies.
Excerpt from resource downloadable from this page:
"Industrial Loan Companies (ILCs) operate under a special exemption in federal law that permits any type of organization – including a large technology company or commercial firm – to control a full-service FDIC-insured bank without being subject to the same oversight and prudential standards or limitations on the mixing of banking and commerce that Congress has established for the U.S. financial system. Simply put, this regulatory loophole creates safety and soundness risks for the institution, risks to the financial system and additional risks for consumers and taxpayers.
When this exception was initially created, ILCs were typically small financial institutions, and companies used the charter for the limited purpose of providing small loans to industrial workers who could not otherwise obtain credit. However, since that time, large commercial companies have used the ILC charter to gain access to the U.S. financial system and control entities that have essentially all of the powers of a full-service commercial bank, including the ability to accept deposits, make consumer and commercial loans and effectuate payments."
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