ABA: FDIC Should Set Standards for Disapproval of ILC Transactions

The FDIC should clearly set out the circumstances under which it would be required to disapprove a deposit insurance application or other industrial loan bank or industrial loan company transaction, ABA recommended in a comment letter to the agency today. Conditions for such disapproval should focus on concerns regarding competition, safety and soundness or other risks, scale and concentration, and consumer protections, ABA said.

The association also recommended that the FDIC be authorized to condition approval of an ILC transaction on a parent company’s compliance with requirements tailored to the ILC’s business plan and to the parent company’s size and risk profile.

ABA’s letter came in response to a recent proposal by the FDIC that would require certain conditions and commitments for such transactions as a deposit insurance application approval by an ILC whose parent company is not subject to Federal Reserve supervision. The proposed rule is intended to codify the FDIC’s current supervisory policies and processes with respect to ILCs and their parent companies.


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