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American Financial Services Association

AFSA Supports Competition and Access to Credit

AFSA Supports Competition and Access to Credit

AFSA joined with the National Association of Industrial Bankers, the Utah Bankers Association, and the Nevada Bankers Association in a letter to all Senators in opposition to S. 3538, the misnamed “Close the Shadow Banking Loophole Act,” introduced at the end of last year. The associations explained that the bill would reduce credit and financing options for consumers and small businesses.

The letter emphasized that the bill would eliminate industrial loan companies (ILCs), which were intentionally created via federal statute, not the result of a “loophole.” The associations wrote, “ILCs are among the safest and soundest banks in the U.S. financial system; are well regulated by federal and state banking agencies; and comply with all safety and soundness, operational, lending, data privacy, and consumer protection laws and regulations. ILCs are very important to the customers they serve and represent only 25 institutions and one percent of domestic banking assets.”

The associations further clarified, “Opposition to ILCs comes from some incumbent financial institutions looking and given the absolute lack of historic safety and soundness concerns, this raises some very troubling anti-competitive concerns that would have the impact of stifling competition and innovation in the provision of banking services to consumers. These institutions are pushing a false narrative that ‘Big Tech’ will use the ILC charter to access the insured depository sector of financial services, creating systemic risks to the financial system and potentially anti-consumer behavior.”

AFSA asked the Senators to oppose S. 3538.

January 24th, 2024 by

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