WASHINGTON – When the Federal Deposit Insurance Corp. broke a decade-long freeze in March 2020 in approving new industrial loan companies, fintech advocates celebrated what they hoped would be an enduring thaw.
But a year and a half later, the political environment is not in ILCs’ please. Democratic appointees hold a 3-1 majority on the FDIC board, giving them enough votes to reject any application that they oppose.
“I expect the Democrats on the board to take a hard look at any charter application that attempts to mix banking and commerce,” said Todd Phillips, director of financial regulation at the Center for American Progress, and a former FDIC attorney.
The ILC, also known as the industrial bank, remains a controversial charter option. Fintech firms view it as a promising avenue to access the banking system without the full brunt of regulatory scrutiny, and it is one of the few charters still available to nonfinancial firms.
Read Also
- This way you can check your voting position for the presidential elections this May 29 May 28, 2022
- Coup in Guinea: the military captured the president Sep 5, 2021
- Presidential elections 2022: this is the correct way to mark the ballot May 29, 2022
- Duque guarantees that there will be no suspension of the presidential elections May 23, 2022
- Democratic Center denounces false trill by Álvaro Uribe Vélez addressed to Rodolfo Hernández May 31, 2022
- Jeanine Áñez criticized the political interference of the Luis Arce government in the trial against her May 28, 2022
- United States Media: Melania Trump refused as an Epiphany to condemn the attack on Capitol Hill Sep 14, 2021
While the prudential regulators appointed by the Trump administration were generally eager to open their charters to fintechs, the Biden administration has signed a more cautious approach.
The FDIC is led by Chair Jelena McWilliams, right, a Trump appointee. But the agency’s five-member board is now stacked with three Democratic appointees, including former Chair Martin Gruenberg, left, and acting Comptroller of the Currency Michael Hsu.
Bloomberg News
“It’s been clear that there are many people in the industry, academia and policymaking circles for some time that have raised very significant concerns about ILCs and industrial banks,” said Dennis Kelleher, president and CEO of Better Markets.