U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – released the following statement after the Federal Deposit Insurance Corporation (FDIC) approved charters for two industrial loan companies (ILCs).
“Now more than ever I’m more worried about Washington’s collective amnesia; we are on the brink of another recession that will hurt hardworking families across the country. Just before the last crisis, regulators gutted financial rules and even considered letting megacorporations like Walmart own banks – and here we go again. Chair McWilliams needs to focus on the families that depend on the banking system, not shuffle corporate favors through the side door while we’re dealing with a pandemic,” said Senator Brown.
On Tuesday, the FDIC proposed a new rule establishing an application and supervisory framework for industrial loan companies (ILCs). ILCs are state-chartered banks that can be owned by commercial companies which are not subject to Federal Reserve oversight like all other bank holding companies that have access to the payment system and are federally insured. Before the last crisis, companies like Walmart applied for these charters. Today, companies, especially financial technology firms like Square and Nelnet are attempting to do the same. The FDIC approved these two ILC charters in the midst of another crisis and despite calls from Congress, the banking industry and consumer groups to hold public hearings and finalize the rule before considering the applications.
Earlier, Ranking Member Brown sent Chair McWilliams a letter demanding that the FDIC postpone all rulemaking unrelated to our response to the COVID-19 crisis.