Van Hollen, Brown, Casey Introduce Bill to Ensure a Fair Banking System
Today, U.S. Senators Chris Van Hollen (D-Md.), Sherrod Brown (D-Ohio), and Bob Casey (D-Pa.) introduced the Close the Shadow Banking Loophole Act, legislation to require companies that own an industrial loan company (ILC) to be subject to the same rules and consumer protections as traditional banks.
ILCs are state-chartered banking institutions whose holding companies are not subject to consolidated supervision by the Federal Reserve, as all other bank holding companies are, due to a loophole in the Bank Holding Company Act. The result is that ILCs owned by tech companies like Square have a leg-up on traditional banks with regulatory safeguards.
The Close the Shadow Banking Loophole Act would close this loophole. The bill requires companies that acquire an ILC to be subject to the same supervision by the Federal Reserve as any other bank holding company under the Bank Holding Company Act. It would also provide a carve-out for existing ILCs.
A one-pager of the bill is available here. The bill text is available here.
The legislation has been endorsed by the National Community Reinvestment Coalition, the Independent Community Bankers of America, Americans for Financial Reform, the Bank Policy Institute, the Center for Responsible Lending, the Credit Union National Association, the National Association of Federally-Insured Credit Unions, the Ohio Credit Union League, PNC Financial Services Group, the Missouri Bankers Association, the Ohio Bankers League, the Pennsylvania Bankers Association, the Georgia Bankers Association, the North Carolina Bankers Association, the Iowa Bankers Association, the Indiana Bankers Association, the New Jersey Bankers Association, and Art Wilmarth, Professor Emeritus of Law at George Washington University.
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