Congratulations to America’s New Industrial Banks
On March 18, 2020, the FDIC approved the applications submitted by Square Financial Services and Nelnet Bank for deposit insurance as new Industrial Loan Corporation (ILC) charters. Simultaneously, the Utah Department of Financial Institutions approved the industrial bank charter applications. (ILCs are also referred to as industrial banks.)
“Square and Nelnet are great additions to the U.S. banking sector. We congratulate them for succeeding through the rigorous federal and state application process,” said Frank Pignanelli, Executive Director of the National Association of Industrial Bankers.
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IN THE NEWS
FDIC finishes long-awaited rules on brokered funds, ILCs
Banks and some of their deposit-gathering businesses won additional regulatory relief when the Federal Deposit Insurance Corp. finalized a new framework for classifying brokered deposits enabling a broader set of companies to escape restrictions.
New Senate Banking chief sets dramatic change of course
Sen. Sherrod Brown, D-Ohio, has made it clear that banking policy will not be the sole area of focus for the committee that he will chair in the new Congress.
Groups hoping to open new banks hit their stride in 2018.
Through Dec. 13, the Federal Deposit Insurance Corp. had approved 14 bank applications, with seven more pending. In comparison, the agency signed off on 10 total charters during the prior two years.
Jelena McWilliams, the new FDIC chairman, has signaled that the agency will be more supportive of de novo banks. The FDIC, for instance, recently announced that it is seeking public comment to improve the application process.
Brokered deposits’ bad rap is undeserved
In advance of an anticipated proposal by the Federal Deposit Insurance Corp. to revise its regulations on brokered deposit, former FDIC Chairman Bill Isaac has staked out a strong position in a recent op-ed, suggesting that easing rules for deposit brokers threatens a repeat of the savings and loan debacle. He later posted a comment to a subsequent op-ed summing up his position this way: “The FDIC should be concerned about third parties bundling deposits in a manner that eliminates the deposit insurance ceiling and selling those funds to the highest bidders. Community bankers beware!”
FDIC’s Jelena McWilliams cautious about nontraditional bank owners
Since arriving at the FDIC, Jelena McWilliams has signaled a willingness to move more quickly on industrial loan company applications than the agency has in the past. But asked her thoughts on letting fintech companies like Social Finance and larger firms such as Apple access to the banking system, McWilliams said regulators should not let down their guard.