Washington, D.C. (Sept. 26, 2018) — Independent Community Bankers of America® (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on Nelnet’s withdrawal of its deposit-insurance and industrial loan corporation applications with the Federal Deposit Insurance Corp. and Utah Department of Financial Institutions.
“ICBA opposed Nelnet’s deposit-insurance application to establish an industrial loan corporation and supports an end to the ILC loophole. Like the since-withdrawn applications of SoFi Bank and Square, Nelnet’s was designed to avoid the legal restrictions and regulatory supervision that apply to other bank holding companies.
“The ILC loophole allows commercial interests to own full-service banks while avoiding Bank Holding Company Act regulations and consolidated supervision by the Federal Reserve—threatening the financial system and creating an uneven regulatory playing field. To support a safe and sound financial system and to maintain the separation of banking and commerce, the FDIC should reinstate the moratorium on ILC applications for two years and Congress should close the ILC loophole for good.
“Fintech firms that wish to own a bank should be subject to the same restrictions and supervision that apply to any other bank holding company. Our deposit-insurance system was created to protect depositors—not commercial firms. ICBA and the nation’s community bankers look forward to continuing to work with policymakers to address the ILC loophole and maintain the separation of banking and commerce.”