Experts expect 'stalemate' on ILC applications
WASHINGTON After a year when crypto tanked and regulators have become increasingly skeptical of bank-fintech partnerships, observers say the prospects of new Industrial Loan Company applications being approved is increasingly remote.
The Federal Deposit Insurance Corp., helmed by newly-confirmed chairman Martin Gruenberg, has had an inconsistent track record in recent years on granting new ILC applications, and that inconsistency is attributable largely to the different attitudes of the agency's leadership over that time.
ILCs are state-chartered and FDIC-insured depositories owned by non-financial companies. Fourteen companies have applied for ILC charters since 2017, but approvals of those applications were few and far between until 2020. In the first year of the pandemic, after 14 years without approvals, Block formerly Square Financial Services Inc. and education financing company Nelnet Bank were granted charters by the FDIC under the leadership of former chair Jelena McWilliams.
Martin Gruenberg, chair of the Federal Deposit Insurance Corp., has taken a dim view on some ILC applications in the past, and increasing pressure from Senate Democrats and banks lead some observers to conclude that ILC applications have a slim chance of being approved while President Biden remains in office.
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