Close the ILC Loophole Act
This bill limits the exemption from certain banking regulations applicable to industrial loan companies to those companies approved to receive Federal Deposit Insurance Corporation insurance before September 23, 2021, or companies with an application pending as of September 23, 2021. Industrial loan companies are state chartered institutions that provide several services similar to banks, such as originating loans and processing payments.
Parent companies of such industrial loan companies are subject to the supervision of the Board of Governors of the Federal Reserve System.
The bill also sets forth procedures regarding a change in control of an industrial loan company.
The Government Accountability Office must report on the effects of industrial loan companies, industrial banks, and other similar institutions on the economy, including the effect on competitiveness, market structure, and different industries.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5912 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5912
To reform the regulation of industrial loan companies and their parent
companies, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 9, 2021
Mr. Garcia of Illinois introduced the following bill; which was
referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
To reform the regulation of industrial loan companies and their parent
companies, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Close the ILC Loophole Act''.
SEC. 2. NEW INDUSTRIAL LOAN COMPANIES NOT ELIGIBLE FOR THE EXEMPTION
FROM THE DEFINITION OF A BANK.
(a) In General.--Section 2(c)(2)(H) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841(c)(2)(H)) is amended by inserting after
``similar institution'' the following: ``which has been approved to
receive deposit insurance from the Federal Deposit Insurance
Corporation on or before September 23, 2021 (or has an application to
receive deposit insurance pending before the Federal Deposit Insurance
Corporation where such application was made on or before September 23,
2021, or has had such an application approved), and''.
(b) Treatment of Deposit Insurance Applications Pending on
September 23, 2021.--
(1) In general.--With respect to an industrial loan
company, industrial bank, or other similar institution that, on
the date of enactment of this Act, has an application to
receive deposit insurance pending before the Federal Deposit
Insurance Corporation that was submitted on or before September
23, 2021, the Federal Deposit Insurance Corporation--
(A) shall provide for a 90-day public comment
period and a public hearing with respect to such
application; and
(B) may only approve such application by a \2/3\
vote of the members of the Board of Directors of the
Federal Deposit Insurance Corporation.
(2) 2-year deadline for approving application.--If the
Federal Deposit Insurance Corporation does not approve an
application described under paragraph (1) before September 23,
2023, such application shall be deemed to have been denied.
(c) Authority With Respect to Deposit Insurance Applications
Granted After September 23, 2021.--
(1) In general.--With respect to a company that has control
over a covered industrial loan company which has been approved
to receive deposit insurance from the Federal Deposit Insurance
Corporation after September 23, 2021 (the ``parent company''),
the primary financial regulatory agency of such parent company
may--
(A) conduct such examinations of, and obtain
reports from, the parent company or any subsidiary of
the parent company (other than a bank) as the agency
determines necessary or appropriate to assess the
parent company's or subsidiaries'--
(i) financial condition;
(ii) systems for maintaining and
controlling financial and operating risks; and
(iii) transactions with depository
institution subsidiaries of the parent company;
and
(B) impose any conditions or restrictions on the
parent company or any subsidiary of the parent company
(other than a bank), including restricting or
prohibiting transactions between the parent company or
subsidiary and any depository institution subsidiary of
the parent company, if such conditions or restrictions
would promote the safety and soundness of the parent
company or any of its depository institution
subsidiaries.
(2) Definitions.--In this subsection:
(A) Covered industrial loan company.--The term
``covered industrial loan company'' means an industrial
loan company, industrial bank, or other similar
institution that--
(i) on the date of the enactment of this
Act, is described under section 2(c)(2)(H) of
the Bank Holding Company Act of 1956; and
(ii) has an application to receive deposit
insurance from the Federal Deposit Insurance
Corporation approved after September 23, 2021,
and before the date of enactment of this Act.
(B) Primary financial regulatory agency.--With
respect to a company, the term ``primary financial
regulatory agency''--
(i) has the meaning given that term under
section 2 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act; and
(ii) with respect to a company that does
not have a primary financial regulatory agency
under clause (i), means the Board of Governors
of the Federal Reserve System.
(C) Other definitions.--The terms ``bank'' and
``depository institution'' have the meaning given those
terms, respectively, under section 2 of the Bank
Holding Company Act of 1956.
SEC. 3. SUPERVISION OF PARENT COMPANIES OF INDUSTRIAL LOAN COMPANIES.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by inserting after section 5 the following:
``SEC. 6. SUPERVISION OF PARENT COMPANIES OF INDUSTRIAL LOAN COMPANIES.
``(a) In General.--The Board shall have the same authority to
require a parent company of an industrial loan company to make reports
and submit to examinations as the Board has with respect to a bank
holding company.
``(b) Parent Company of an Industrial Loan Company Defined.--In
this section, the term `parent company of an industrial loan company'
means a company that has control over an entity that--
``(1) is an industrial loan company, industrial bank, or
other similar institution; and
``(2) is not a bank.''.
SEC. 4. CHANGE OF CONTROL.
(a) In General.--Except as provided in subsection (b), the
appropriate Federal banking agency shall disapprove a change in
control, as provided in section 7(j) of the Federal Deposit Insurance
Act (12 U.S.C. 1817(j)), of an industrial loan company.
(b) Exceptions.--Subsection (a) shall not apply to a change in
control of an industrial loan company--
(1) that--
(A) is in danger of default, as determined by the
appropriate Federal banking agency;
(B) is the result of the acquisition of control of
the industrial loan company by a company that was an
affiliate of the industrial loan company on September
23, 2021, through an internal corporate reorganization
of a company that directly or indirectly controlled the
industrial loan company on that date;
(C) results from an acquisition of voting shares of
a publicly traded company that controls an industrial
loan company if, after the acquisition, the acquiring
shareholder (or group of shareholders acting in
concert) holds less than 25 percent of any class of the
voting shares of the company; or
(D) will be controlled, directly or indirectly, by
a firm subject to consolidated supervision by the Board
of Governors of the Federal Reserve System as a--
(i) bank holding company;
(ii) savings and loan holding company; or
(iii) foreign bank treated as of July 1,
2020, as a bank holding company under the
International Banking Act of 1978 (12 U.S.C.
3101 et seq.); and
(2) that has obtained all regulatory approvals otherwise
required for such change of control under any applicable
Federal or State law, including section 7(j) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(j)).
(c) Definitions.--In this section:
(1) Appropriate federal banking agency.--The term
``appropriate Federal banking agency'' has the meaning given
that term under section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
(2) Industrial loan company.--The term ``industrial loan
company'' means an industrial loan company, industrial bank, or
other similar institution.
SEC. 5. GAO STUDY.
(a) Study.--The Comptroller General of the United States shall
carry out a study on the effects of industrial loan companies,
industrial banks, and other similar institutions on the U.S. economy,
including the effect on competitiveness, market structure, and
different industries.
(b) Report.--Not later than the end of the 1-year period beginning
on the date of enactment of this Act, the Comptroller General shall
issue a report to the Congress containing all findings and
determinations made in carrying out the study under subsection (a).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Committee Consideration and Mark-up Session Held.
Ordered to be Reported in the Nature of a Substitute (Amended) by the Yeas and Nays: 28 - 25.
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