At Issue: Retailers Purchasing Industrial Loan Companies (ILCs)
Wednesday, May 2, 2007
In general,
commercial firms are not permitted to own banks. However,
they are permitted to own industrial loan companies (ILCs),
which are institutions that closely resemble banks and are
permitted in a handful of states, primarily Utah.
Traditionally, these ILCs have been used only for very limited
purposes, such as providing financing for consumer customers
of the parent firm. In the past several years more and
more commercial firms, including large retail companies,
have begun trying to start or purchase industrial loan companies,
raising concern that they will offer a wide variety of banking
services and eroding the separation between banking and
commerce. Chairman Barney Frank joined Rep. Paul
Gillmor in submitting bipartisan legislation to close a loophole
in the nation's banking laws that allow retailers and other
commercial firms to own industrial loan companies (ILCs), also
known as industrial banks.
H.R. 698,
the "Industrial Bank Holding Company Act of 2007," will
enhance regulation of the parent companies
of industrial banks, restore the traditional separation
between banking and commerce, prevent branch banking by
some commercially-owned ILCs, prohibit the FDIC from granting
new charters to commercial companies seeking to start or
acquire ILCs, and bolster the examination and enforcement
authorities of the FDIC as an ILC regulator. H.R. 698 is
similar to HR 5746, which Frank and Gillmor introduced
in the 109th Congress. ILCs are
authorized in fewer than seven states, with most established
in Utah. Due to a
loophole in the Bank Holding Company Act, they are eligible
for federal deposit insurance from the FDIC, but can be
owned by commercial firms, unlike other banks. Commercial
firms are defined as those who derive at least 15 percent
of their revenue from activities that are commercial. In
addition, the parent companies are not subject to supervision
by the Federal Reserve as are bank holding companies,
although they are subject to some supervision by the FDIC.
Click here for a copy of H.R. 698, the "Industrial Bank Holding Company Act of 2007."
The "Industrial Bank Holding Company Act of 2007" was marked up
in committee on May 2, 2007 and it was voted favorably out of
the Financial Services Committee by a voice vote.
Click here for documents related to the committee markup of this
bill.
On May 21, 2007 the House of Representatives passed the
"Industrial Bank Holding Company Act of 2007" by a vote of
371-16.
Click here to see how Members of the House voted.
Click here for version of bill
adopted by the House.
3/16/2007
Statements of Reps. Gillmor and Frank Regarding Wal-Mart ILC
Announcement
Washington, DC - Congressmen Paul Gillmor (R-OH), the Ranking
Member of the Financial Institutions Subcommittee and House
Financial Services Committee Chairman Barney Frank (D-MA), the
sponsors of the Industrial Bank Holding Company Act of 2007,
made the following statements on today’s decision by Wal-Mart
to, after 20 months, withdraw its application for an Industrial
Loan Companies (ILC) charter:
Read full story.
1/31/2007
Reps.
Gillmor and Frank Commend FDIC for Prudent Extension of
the Moratorium
Washington, DC - Congressmen Paul Gillmor (R-OH), the Ranking
Member of the Financial Institutions Subcommittee and House
Financial Services Committee Chairman Barney Frank (D-MA),
the sponsors of the Industrial Bank Holding Company Act of
2007, made the following statements on today's decision by
the Federal Deposit Insurance Corporation (FDIC) to set a one
year moratorium on the chartering or acquisition of commercially-owned
Industrial Loan Companies (ILC): Read
full story.
1/29/2007
Gillmor
and Frank Re-Introduce Bipartisan Legislation to Curb ILCs
WASHINGTON, DC- Congressmen Paul Gillmor (R-OH) and Financial
Services Committee Chairman Barney Frank (D-MA) today introduced
bipartisan legislation to close one of the remaining exceptions
in banking law that allow retailers and other commercial firms
to engage in banking. The legislation is an outgrowth of Gillmor/Frank
amendments which passed the House of Representatives in the
108th and 109th Congresses to prohibit newly formed commercially-owned
ILCs from gaining additional powers, including opening branches
nationwide. Read
full story.
07/28/2006
Frank and Gillmor Commend FDIC For Six Month Moratorium on
ILCs
Washington, DC- U.S. Representatives Barney Frank
and Paul E. Gillmor made the following statements on today's
decision by the Federal Deposit Insurance Corporation (FDIC)
to set a six-month moratorium on the chartering or acquisition
of Industrial Loan Companies (ILC). Read
full story.
07/28/2006
Frank and Gillmor Commend
FDIC For Six Month Moratorium on ILCs
Washington, DC- U.S. Representatives
Barney Frank and Paul E. Gillmor made the following statements
on today's decision by the Federal Deposit Insurance Corporation
(FDIC) to set a six-month moratorium on the chartering or
acquisition of Industrial Loan Companies (ILC).
Read
full story.
07/10/2006
Gillmor and Frank Introduce
Bipartisan Legislation to Curb Retailers from Buying ILCs
Washington, DC- Congressmen Paul E.
Gillmor (R-OH) and Barney Frank (D-MA) today introduced bipartisan
legislation to close a loophole in the nation's banking laws that
allow retailers and other commercial firms to own industrial loan
companies (ILCs), also known as industrial banks.
Read full story.
06/08/2006
98 Members of Congress Call for
Moratorium on ILC Applications
Washington, DC- Today, 98 Members of
Congress led by Congressman Paul Gillmor (R-OH) and Financial Services
Committee Ranking Member Barney Frank (D-MA) wrote to Federal Deposit
Insurance Corporation (FDIC) Acting-Chairman Martin Gruenberg asking that
the FDIC impose a moratorium on all commercial industrial loan company (ILC)
applications for federal deposit insurance until Congress has acted on the
issue. Read full story.
Click here for Wal-Mart's May
25, 2006 letter responding to Rep. Frank's inquiry into their
in-store bank branch leases.
Click here for Rep. Frank's May 3, 2006 letter to Wal-Mart
requesting information on their in-store bank branch leases.
04/20/2006
Rep. Frank Comments on
Wal-Mart's ILC Application
Washington, DC- The following is a
letter Rep. Frank wrote to the FDIC commenting on Wal-Mart's ILC
application. Read full story.
02/23/2006
Reps Gillmor and Frank Comment
on FDIC's Decision to Hold Wal-Mart Bank Hearings
Washington, DC- Congressman Paul
Gillmor (R-OH) and Ranking Member Barney Frank (D-MA) released the
following statements regarding the decision by the Federal Deposit
Insurance Corporation to hold four days of hearings on the Wal-Mart
application for an Industrial Loan Company (ILC) charter in the State of
Utah. Read full story.
01/20/2006
Congressman Barney Frank and
Congressman Paul Gillmor React to the FDIC Letter on Wal-Mart's
Application for Deposit Insurance
Washington, DC- Congressman Barney
Frank, the Ranking Democratic Member of the House Financial Services
Committee and Congressman Paul E. Gillmor (R-OH), also a senior member of
the House Financial Services Committee, today made the following
statements in response to a letter from the FDIC regarding Wal-Mart's
application for deposit insurance.
Read full story.
12/16/2005
25 Financial Services Committee Members Urge FDIC to Wait on
Wal-Mart Application
Washington, DC-
Today,
Congressman Paul Gillmor (R-OH) and Ranking Member Barney Frank (D-MA)
joined with 23 other members of the House Committee on Financial Services
in sending a letter to Federal Deposit Insurance Corporation (FDIC)
Acting-Chairman Martin Gruenberg asking that the FDIC delay any further
action on the Wal-Mart application for deposit insurance until the vacancy
on the FDIC Board of Directors is filled.
Read full story.
11/07/2005
Frank and Gillmor Weigh in on Wal-Mart's Deposit Insurance
Application
Washington, DC-Congressmen Barney Frank (D-MA), the Ranking
Democratic Member on the House Financial Services Committee and Paul E.
Gillmor (R-OH), also a senior member of the Financial Services Committee,
today wrote to the FDIC urging that Wal-Mart be required to adhere to
their promises not to engage in branch banking as part of their
application for deposit insurance.
Read text of
letter here.