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ARTICLE · 24 DECEMBER 2020

FDIC Finalizes Rules For ILC Holding Companies

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The Federal Deposit Insurance Corporation ("FDIC") released a final rule on December 15, 2020, concerning industrial banks and industrial loan companies (collectively, "ILCs")...

United StatesFinance and Banking
Mark Chorazak
Mark Chorazak
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The Federal Deposit Insurance Corporation ("FDIC") released a final rule on December 15, 2020, concerning industrial banks and industrial loan companies (collectively, "ILCs") and their parent companies (the "Final Rule"). The Final Rule, which takes effect on April 1, 2021, is an important development in the changing regulatory approach to ILCs and should be of interest to those fintech firms and others seeking to provide certain banking services without becoming bank holding companies.

New Regime for ILC Holding Companies Going Forward

ILCs are state-chartered insured depository institutions that are "banks" for purposes of the Federal Deposit Insurance Act ("FDI Act") but not the Bank Holding Company Act (the "BHC Act"). As a result, ILC charters have been regarded as highly valuable: there are only 23 currently operating and they have been relatively difficult to establish or acquire, and their parent companies are not regulated and supervised as bank

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