washington d.c. – The U.S. House Committee on Financial Services met today to annotate a series of proposed legislation, including a bill to close the Industrial Loan Corporation (ILC) loophole. . The ILC loophole allows Big Tech and other non-bank companies to offer financial products and services without complying with the safeguards and oversight required of bank holding companies. The “ILC Loophole Closure Act” (HR 5912) is now up for consideration by the entire legislature.
Americans for Financial Reform, Bank Policy Institute, Center for Responsible Lending, Consumer Federation of America, Credit Union National Association, Independent Community Bankers of America, Mid-Size Bank Coalition of America, National Association of Federally-Insured Credit Unions, National Community Reinvestment Coalition, National Consumer Law Center and US PIRG previously submitted a joint letter of support to the Committee ahead of the vote and issued the following statement in response to its adoption:
With today’s vote, the Committee takes another step toward strengthening the financial system by closing the CIT loophole, and we call on Congress to pass this legislation without delay. The current version of the legislation helps preserve the long-standing separation between banking and commerce and prevents Big Tech companies from circumventing existing rules by using a loophole to enter the banking system. This effort reflects the extraordinary bipartisan work of Representatives Jesús “Chuy” García and Lance Gooden to work with stakeholders to reach a solution, and it serves as an acknowledgment that there is no justifiable reason for two similar institutions offering indistinguishable products or services to deal with. differently by law.
The legislation would help eliminate legal disparities between bank holding companies and ILC parent companies by imposing consistent regulatory and prudential expectations.
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Contact: Rachel Gittleman, [email protected]