Industry Groups Oppose Rakuten’s Re-Submitted Deposit Insurance Application

The American Bankers Association joined the Bank Policy Institute and the Consumer Bankers Association today in expressing strong opposition to an application for deposit insurance submitted by Rakuten—a major Japanese e-commerce company—for its U.S. bank subsidiary, Rakuten Bank America. The company recently re-submitted the application after withdrawing its original application in late March.

The groups noted that the re-submitted application “has not materially changed and does little to address the fundamental question of mixing banking and non-financial activity as raised by the initial application, including concerns involving the use, privacy and security of customer information.”

The groups reiterated several concerns raised in previous comment letters, including that approving Rakuten’s application would pose significant risks to the Deposit Insurance Fund and that Rakuten Bank does not present a viable business model.

The groups urged the FDIC to neither review nor approve the application, noting that “review and approval of the Rakuten application would run counter to the FDIC’s responsibilities to protect the DIF and to ensure that the convenience and needs of the community to be served are met.” Should the agency decide to remove forward, a public hearing should be held, the groups added.

While ABA is committed to charter choice, it believes Rakuten’s application raises troubling questions on inappropriate commingling of banking and non-financial activity.