FDIC Adopts Final Rule Regarding ILC Applications

Highlights

• The Federal Deposit Insurance Corporation (FDIC) approved a final rule that clarifies how it intends to treat applications to insure an industrial bank or industrial loan company (ILC) or to merge with or acquire control of an ILC.
• ILC charters are sought because owning or controlling an ILC is the only way for nonfinancial services companies, which are prohibited under the federal Bank Holding Company Act (BHCA) from owning or controlling a bank, to offer banking services and products (including deposit products) to their customers.
• The final rule provides that, in any case where approval of such an application will result in a nonfinancial company owning or controlling an insured ILC and thus not being subject to the BHCA or to consolidated supervision by the Federal Reserve Board as provided in the BHCA: 1) the approval must include certain conditions and commitments and 2) the company and the ILC must have entered into one or more written