ABA Opposes Rakuten’s Third Attempt at Federal Deposit Insurance

The American Bankers Association wrote to the FDIC today expressing strong opposition to another attempt by Rakuten, a major Japanese e-commerce company, to obtain federal deposit insurance. This is the third application the company has submitted on behalf of its proposed industrial bank subsidiary, Rakuten Bank America, and ABA urged the FDIC to expressly disapprove it.

In the letter, ABA noted that the re-submitted application has not materially changed and does little to address the fundamental question of mixing banking and commerce. ABA reiterated previous concerns about potential risks to the deposit fund if the application were to be approved, particularly with respect to the excessive dependence of the proposed bank on its parent company and affiliates and the potential use, privacy, and security of customer information.

While ABA has long been a strong advocate for charter choice, the association noted that “questions of mixing banking and non-financial commerce, particularly powered by data sharing across an enterprise, continue to raise serious policy questions as well as considerations over the role of federal deposit insurance.”