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For Immediate Release: June 8, 2006

99 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.

Congressman Gillmor said, "Basically, we have a few commercial companies which want to be treated differently than the overwhelming majority of companies that offer financial services. I continue to believe that Congress should take a good hard look at what is appropriate for our financial system and the future of banking and commerce. We must consider the impact of giving a company a foot today when it intends to take a mile tomorrow."

"It is now clear with the application from Home Depot joining the application of Wal-Mart that it is now time for Congress to deal in a thoughtful and responsible manner with the policy implications of a significant expansion of the ILC model," said Congressman Barney Frank. "The complexity and importance of this issue make it wholly appropriate for the FDIC to withhold action until we can have a full debate and resolution of this issue in a place where national policy should be made-the Congress of the United States."

The bipartisan letter to Chairman Gruenberg is as follows:

Dear Chairman Gruenberg:

We urge the Federal Deposit Insurance Corporation to impose a moratorium on approving any applications for deposit insurance for any new industrial loan companies (ILCs) owned by commercial firms and on approvals for acquisitions of existing ILCs until Congress has had an opportunity to consider the ILC issue.

As you know, the House has twice this Congress and once last Congress passed provisions authored by Congressmen Gillmor and Frank that would restrict the authority of ILCs who come under the control of commercial firms after October 1, 2003 to engage in certain activities, specifically nationwide branching and paying interest on business negotiable order of withdrawal accounts. Some Members of Congress will soon be introducing legislation that will address the ILC issue in a comprehensive manner and as you know, last year Congressman Leach introduced HR 3882, a bill that would prohibit ownership of ILCs by any firm other than a bank holding company.

Further evidence that Congress is moving to address the issue are press reports that Chairman Bachus of the Financial Institutions Subcommittee has said that the subcommittee will hold hearings on the ILC issue later this year.

Over the past several years the number of commercial firms seeking to obtain an ILC charter has grown at an ever-increasing pace. What was once a minor exception to the general separation of banking and commerce has grown into an industry unto itself, with ever-larger commercial and retail firms seeking to obtain an ILC charter. While many of these firms say that they want to own an ILC for very narrow purposes, and file narrow business plans with their applications, it is not clear that the FDIC has the legal authority to permanently prevent them from engaging in activities that are permitted by their chartering state, so long as they remain well-capitalized and operate in a safe and sound manner. The issue of the powers of ILCs, and the extent of who may own an ILC, is an issue that Congress has begun to address, and the FDIC should wait until Congress has acted before authorizing any additional commercially-owned ILCs.

Signed, Representatives: Abercrombie, Aderholt, Alexander, Baca, Baird, Baldwin, Beauprez, Blumenauer, Bonner, Boswell, Capps, Capuano, Carson, Clay, Cramer, Danny Davis, DeFazio, DeGette, DeLauro, Drake, Edwards, Etheridge, Everett, Filner, Fitzpatrick, Fortenberry, Frank, Gillmor, Gohmert, Goode, Goodlatte, Gordon, Granger, Al Green, Gutierrez, Herseth, Hinojosa, Holden, Jackson-Lee, Tim Johnson, Steve King, LaHood, Latham, Leach, Lee, Levin, Lipinski, Frank Lucas, Lynch, Marchant, Markey, Marshall, Matsui, McCarthy, McCollum, McGovern, Michaud, Brad Miller, George Miller, Moore, Jerry Moran, Jim Moran, Musgrave, Nussle, Oberstar, Obey, Osborne, Pascrell, Paul, Pearce, Peterson, Pomeroy, David Price, Regula, Reichert, Robal-Allard, Mike Rogers (AL), Tim Ryan, Salazar, Linda Sanchez, Sanders, Schakowsky, Schiff, Schwartz, Sherman, Slaughter, Adam Smith, Chris Smith, Solis, Stupak, Tubbs Jones, Mark Udall, Visclosky, Wasserman Schultz, Waters, Watson, Watt, Wu
 

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The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws.