Renewing longstanding opposition to industrial loan charters, the Independent Community Bankers of America urged the Federal Deposit Insurance Corp. to impose a two-year moratorium on such applications.
The trade group also pressed the FDIC to reject an
The ICBA noted that Nelnet, in addition to servicing loans, acts as a venture-capital investor and operates sports software and telecommunications businesses, which the Bank Holding Company Act bars traditional banks from entering. The trade group argued that the industrial loan charter, by letting institutions pursue such nonbank activities, creates an uneven playing field.
“As we stated in our comment letters regarding [earlier applications], for safety and soundness reasons and to maintain the separation of banking and commerce, the FDIC should deny any ILC application,” Chris Cole, the ICBA's senior regulatory counsel, wrote Tuesday in a letter to FDIC officials.
Absent a moratorium, Cole claimed, industrial loan charters might prove tempting acquisition targets for other fintech firms that don’t want to part with nonbank businesses. Square and SoFi recently briefly filed applications, though both companies withdrew their petitions.
Square, a payments processor that also owns a food delivery service, has indicated that it
Nelnet filed its application on June 28 with the FDIC and the Utah Department of Financial Institutions.
While lobbying for the FDIC to put the brakes on industrial loan charters, the ICBA has also expressed concerns about the Office of the Comptroller of the Currency’s plan to offer a
Rebeca Romero Rainey, the ICBA's president and CEO, said in a press release Wednesday that any firm receiving such a charter “should be subject to the same supervision and regulation required of community banks, including oversight and regulation of parent companies under the Bank Holding Company Act.”
