This week, the American Financial Services Association (AFSA), in conjunction with other financial associations, called for the Federal Deposit Insurance Corporation (FDIC) to retract a proposed rule. According to the associations, this rule could have a detrimental effect on current Industrial Loan Companies (ILCs) and deter future applicants.
In July 2024, the FDIC communicated its plan to modify the regulations for parent companies of industrial banks and ILCs. This proposed adjustment could limit these financial institutions' capacity to supply capital to small businesses and consumers, potentially affecting underserved communities. AFSA has formally opposed the FDIC's proposal, labeling it both unnecessary and without sufficient justification.
Adding to the discourse, 19 bipartisan Members of Congress last year requested the FDIC to reconsider the proposed rule. They pointed out that the rule could “create significant uncertainty for existing industrial banks and may impede their ability to offer critical products and services to consumers.”
The letter to the FDIC was endorsed by AFSA, alongside the Alliance for Automotive Innovation, National Association of Industrial Bankers, National Automobile Dealers Association, Nevada Bankers Association, and Utah Bankers Association.