The Federal Deposit Insurance Corporation (FDIC) has decided to withdraw its proposed rule concerning Parent Companies of Industrial Banks and Industrial Loan Companies (ILC). This decision, made unanimously on July 15, 2025, reverses a rule that was issued in August 2024. The proposed rule had faced criticism for potentially discouraging future applications and affecting existing ILCs that serve as vital capital sources for small businesses and consumers, particularly in underserved areas.
In March, the American Financial Services Association (AFSA), along with other financial associations, sent a letter to the FDIC urging them to withdraw the proposal. They argued it would negatively impact current ILC institutions and deter new applications. A bipartisan group of 19 Members of Congress also expressed concerns that the rule would "create significant uncertainty for existing industrial banks and may impede their ability to offer critical products and services to consumers."
The FDIC has also decided to seek input from interested parties on how it reviews filings submitted by industrial banks.
AFSA welcomed the FDIC's decision to withdraw the proposed rule. The association looks forward to providing information on how ILCs play a crucial role in assisting consumers and communities.