{"id":112655,"date":"2022-04-05T15:45:07","date_gmt":"2022-04-05T19:45:07","guid":{"rendered":"https:\/\/ncrc.org\/?p=112655"},"modified":"2022-04-05T15:47:49","modified_gmt":"2022-04-05T19:47:49","slug":"banks-credit-unions-and-consumer-groups-call-for-passage-of-bipartisan-solution-to-close-ilc-loophole","status":"publish","type":"post","link":"https:\/\/ncrc.org\/banks-credit-unions-and-consumer-groups-call-for-passage-of-bipartisan-solution-to-close-ilc-loophole\/","title":{"rendered":"Banks, Credit Unions and Consumer Groups Call for Passage of Bipartisan Solution to Close ILC Loophole"},"content":{"rendered":"

The National Community Reinvestment Coalition (NCRC) joined a broad coalition of bank and credit union associations and consumer organizations in submitting a letter Tuesday to the U.S. House Committee on Financial Services urging passage of the <\/span>Close the ILC Loophole Act<\/span><\/i>, introduced by Representatives Chuy Garcia (D-IL) and Lance Gooden (R-TX).<\/span><\/p>\n

\u201cOur banking and finance systems have long-standing guardrails to ensure they work in the public interest,\u201d NCRC President and CEO Jesse Van Tol said<\/strong>. \u201cIt is wrong to let a few corporations hop over those guardrails to obtain consumer information and impair small businesses from competing, then hop back without ever meeting the obligations of a real bank. We encourage all members of Congress to join Reps. Garcia and Gooden and correct that mistake by closing the industrial loan corporation (ILC) loophole.\u201d<\/span><\/p><\/blockquote>\n

The ILC loophole allows large technology companies \u2014 such as Japanese e-commerce firm Rakuten, an international conglomerate\u00a0 \u2014 and other commercial firms to own and operate what is essentially a full-service FDIC-insured bank, and do so entirely free from the regulatory oversight, activity limitations and prudential safeguards that apply to every other person who owns or operates a federally-insured depository institution.<\/span><\/p>\n

\u201cAlthough ILCs have the powers of a commercial bank, their corporate owners \u2014 unlike the owners of commercial banks \u2014 are not subject to consolidated supervision and regulation by a federal banking agency, which can allow risks to build up in the organization outside the view of any federal supervisor. Simply put, this regulatory loophole creates safety and soundness risks for the institution, risks to the financial system and additional risks for consumers and taxpayers,\u201d the groups wrote in their letter<\/a>. \u201cILC owners should not have the ability to sell their status rights to the highest bidder and therefore exploit consumer data, undermine trust in our banking system and otherwise put our financial system at risk. To put it more simply, allowing existing ILCs to transfer their rights to an unaffiliated party would be the legislative equivalent of attempting to close the barn door but leaving the side of the barn wide open.\u201d<\/span><\/p><\/blockquote>\n

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The organizations represented in the letter include the Americans for Financial Reform, Bank Policy Institute, Center for Responsible Lending, Consumer Federation of America, Credit Union National Association, Independent Community Bankers of America, Mid-size Bank Coalition of America, National Association of Federally-Insured Credit Unions, National Consumer Law Center, National Community Reinvestment Coalition and U.S. PIRG.<\/span><\/p>\n

The <\/span>Close the ILC Loophole Act<\/span><\/i> would help to protect the longstanding separation between banking and commerce and applies new rules to the sale and transfer of an existing ILC so that companies currently taking advantage of these privileges aren\u2019t able to pass along their special exemptions indefinitely.<\/span><\/p>\n

To access a copy of the letter, please <\/span>click here<\/span><\/a><\/p>\n

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.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

NCRC joined a broad coalition of advocacy groups and banking industry leaders to urge Congress to close an obscure and dangerous loophole in US banking 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