American Financial Services Association

AFSA Opposes Bill to Eliminate Key Part of Financial System

Blog Posts

AFSA Opposes Bill to Eliminate Key Part of Financial System

AFSA yesterday submitted a comment letter to Senate Committee on Banking Housing & Urban Affairs Chair Mike Crapo (R-ID) and Ranking Member Sherrod Brown (D-OH) opposing S. 2839, the Eliminating Corporate Shadow Banking Act of 2019.

This pejoratively titled bill would effectively end the century old industrial banking industry. Industrial banks were formed in 1910 and are state-chartered, regulated by the states and the Federal Deposit Insurance Corp. (FDIC). The letter points out that they are subject to the same laws, supervised and examined by both the states that charter them and the FDIC and are required to have “the same safety and soundness, consumer protection, deposit insurance, Community Reinvestment Act, and other requirements as other FDIC-insured depository institutions.”

If S. 2839 is enacted, current state laws governing industrial banks – laws that are effective – would be preempted by burdensome and needless federal regulations. “In an era of new fintech entrants in the financial marketplace, AFSA sees no policy reason for a longstanding, successful, and thoroughly regulated industry to be destroyed,” Ann Harter, Vice President of Congressional Relations wrote in the letter. “We urge you to oppose S. 2839 and continue to support a vibrant dual banking system.”

December 12th, 2019 by