FDIC Extends Moratorium on ILC Applications
|February 5, 2007|
|Notice of Proposed Rule Making Comments due by May 7, 2007. [pdf]|
The FDIC on Wednesday extended its moratorium on applications for ILC (Industrial Loan Company) charters from commercial entities for one year. House Financial Services Chairman Barney Frank (D-MA) and Paul Gillmor (R-OH) applauded the move, saying this would give Congress time to consider legislation that would ban new commercial company ownership of an ILC. The ILC charter is the only way left for commercial companies to own a financial company that receives FDIC insurance coverage. This state charter was not terminated when Congress enacted the Gramm/Leach/Bliley Act that closed the unitary thrift loophole. A unitary thrift could be owned by a commercial firm. Both Walmart and Home Depot have ILC applications before the FDIC, and it is these companies that are seen as the focus of critics. Commercial firms that currently own ILCs include Target, GM, and GE. Under the FDIC's action, financial firms' applications will now move forward under previous guidelines.