BPI President and CEO Submits Formal Statement Ahead of House Subcommittee Hearing
Washington, D.C. — BPI President and CEO Greg Baer submitted a formal statement for the record for today’s House Financial Services Committee Subcommittee on Consumer Protection and Financial Institutions hearing examining trends in financial institution charters. The statement examines the evolution of industrial loan companies from their legal origins to their current form, and discusses the implications of the statutory loophole that allows FinTechs and Big Tech to offer banking products and services without having to meet all of the rules applied to banking organizations subject to comprehensive, consolidated supervision. The statement strongly supports Congressional efforts to close the ILC loophole, while recognizing the need both to establish appropriate grandfathering provisions and to exclude parents of ILCs that are already subject to consolidated supervision that do not pose additional risks.
“BPI’s members welcome competition with new entrants to the banking system provided that those new entrants are subject to the same prudential supervision framework and activity restrictions that Congress has established for the corporate owners of full-service insured banks,” the statement remarks. “BPI urges Congress to act soon to ensure that the financial system and America’s consumers are protected from heightened risks posed by the advance of large technology firms into the banking system.”
ILCs represent just one of the many blueprints being considered by FinTechs and Big Techs as they attempt to gain access to the banking system. The statement notes that allowing this loophole to remain could lead to the misuse of personal data, the introduction of discriminatory pricing and other possible risks to the banking system. These risks are further outlined at KeepBankingSafe.com, and through the following resources:
- Tangled Up in Technicalities – An Historical Perspective on the Current ILC Debate
- FinTech and Big Tech Companies Want the Benefits of Banking Without the Responsibilities. Loopholes Could Let Them Succeed.
- Is It OK for FinTechs To Use Regulatory Arbitrage To Avoid Consolidated Supervision?
- Industrial Loan Corporation (ILC) Issue Summary
To read the full statement, please click here.
Bank Policy Institute