On September 27, 2024, Andrew Bigart, Max Bonici, and Chelsie Rimel published “FDIC's Cautious Approach to Industrial Banks, Reaffirmed” in Law360. The following is an excerpt:
Becoming or owning an industrial loan company, or ILC — the elusive nonbank bank option, as Congress coined the term in 1987 — still has an allure for financial services providers that want to (1) lend on a national scale while avoiding state-by-state licensure, (2) accept insured deposits with some limits, and (3) avoid full, comprehensive regulation and supervision of parent companies and various affiliates by the Federal Reserve under the Bank Holding Company Act.
Fintechs and other nonbanks considering becoming or obtaining an ILC may have noted some recent developments at the Federal Deposit Insurance Corp., including the approval of a somewhat new ILC's application for FDIC deposit insurance, as well as a proposed rule announced in July concerning the FDIC regulations for parent companies of ILCs.
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