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American Financial Services Association

House Committee Holds Hearing on the Future of Banking

House Committee Holds Hearing on the Future of Banking

Yesterday, a House Financial Services Subcommittee held a hearing on how bank consolidation and the emergence of nonbank financial technology companies (fintechs) are reshaping the banking system. In recent years, fintechs have gained a larger share of the consumer, mortgage, and small business lending market. Some fintechs have even pursued bank charters, including Industrial Loan Company (ILC) charters, to enhance their ability to offer financial services.

Some advocates have previously raised concerns that ILC-chartered institutions are not sufficiently regulated since they are not subject to supervision by the Federal Reserve under the Bank Holding Company Act (BHCA). In advance of the hearing, AFSA wrote a letter to Representatives Ed Perlmutter (D-CO) and Blaine Luetkemeyer (R-MO), the senior Democratic and Republican members on the Subcommittee on Consumer Protection and Financial Institutions, clarifying that industrial banks are indeed subject to the same banking laws and are regulated in the same manner as other depository institutions.

“They [industrial banks] are supervised and examined both by the states that charter them and by the FDIC. They are subject to the same safety and soundness, consumer protection, deposit insurance, Community Reinvestment Act, and other requirements as other FDIC-insured depository institutions,” AFSA wrote.

During the past five decades, industrial banks have compiled among the best records of capitalization and profitability of any group of banks in the nation, and they represent a sector of the financial services industry that should be encouraged to grow.

October 1st, 2021 by

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