FDIC proposes stricter standards on industrial loan companies

Details: The proposed amendments to part 354 of the FDIC rules and regulations would:

• Set forth additional criteria the FDIC would consider when assessing the risks presented to an ILC by its parent organization and evaluating the ILC’s ability to function independently of the parent organization.

• Clarify the relationship between written commitments and the FDIC’s evaluation of the statutory factors applicable to an industrial bank filing.

• Include conversions involving a proposed ILC under section 5 of the Home Owners’ Loan Act.

• Apply part 354 to ILC parent companies if there is a change of control or merger involving the parent company.

• Provide the FDIC authority to apply part 354 when an ILC would become a subsidiary of a company that is not subject to federal consolidated supervision.

More: The FDIC said the reforms are designed to mitigate risks to the Deposit Insurance Fund and to provide necessary transparency for market participants. Public comments on the proposal are due 60 days after publication in the Federal Register.

Recent ILC Charter: Following last month’s FDIC approval of the formation of Thrivent Bank—a new ILC based in Utah—ICBA reiterated its strong opposition to the ILC loophole and repeated its call for Congress to permanently close the ILC loophole.

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

Interested in discussing this and other topics? Network with and learn from your peers with the app designed for community bankers. Join the conversation with ICBA Community.

Interested in discussing this and other topics? Network with and learn from your peers with the app designed for community bankers. Join the conversation with ICBA Community.

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