Industrial Loan Companies
Industrial Loan Companies (ILCs) are
state-chartered institutions insured by the
Federal Deposit Insurance Corporation. Only five states have active
ILC charters while a limited number even have the authority, of which
Georgia is not one. When Congress amended the Bank Holding Company Act
in 1986 and closed the non-bank bank loophole, it was clear they
intended to have a wall separating commercial firms and banks. However,
ILCs were considered an exception at the
time which today threatens to bring down that wall.
While some industrial loan companies are owned by regulated financial
firms, others are owned by, or could be owned by, unregulated commercial
companies, including some of the largest companies in the country. For
example, applications to the FDIC include one from Wal-Mart and another
from Home Depot. Although these applications were withdrawn, the GBA
joined with other state bankers associations in sending a joint
comment letter to the FDIC on the Wal-Mart application as did
numerous other interested groups. Since that time, the FDIC announced a
six-month moratorium and then another year-long moratorium on all ILC
applications to take a broad look at the policy implications of mixing
banking and commerce. The last moratorium expired in January 2008.
H.R. 698 was introduced by Rep. Barney Frank (D-MA) and passed by the
House of Representatives during 2007. This legislation effectively
closes the ILC loophole by banning commercial firms from chartering or
acquiring ILCs. The Senate Banking
Committee recently passed similar legislation and is expected to be
taken up by the full Senate by Spring 2008. The GBA has
written to members of the
Georgia Congressional Delegation asking for their support of this
important legislation.
Questions? Email the Webmaster.
GBA's professional staff represents the membership at the both the state and federal levels. Contact any of them with questions about issues:
Joe Brannen,
President
Elizabeth Chandler, Senior Vice President - Government Relations
Don Browne, Legislative Consultant