WASHINGTON– America’s Credit Unions has joined with a coalition of other trade groups, and consumer organizations in endorsing legislation that seeks to close the industrial loan company loophole.
According to the organizations, the loophole undermines the separation of banking and commerce by allowing commercial firms and nonbanks to own FDIC-insured banks without being subject to the full set of safeguards required of other insured banks, such as consolidated Federal Reserve oversight.
The group said the “Close the Shadow Banking Loophole Act,” introduced by Sens. John Kennedy (R-LA) and Andy Kim (D-NJ), would protect consumers and the financial system by requiring all companies engaged in the same banking activities to follow the same rules.
What Groups Said
In addition to filing a letter of support, the groups stated, “We support the Close the Shadow Banking Loophole Act and urge swift passage of the bill into law. Companies that act like banks should be regulated like banks. The ILC loophole blurs the line between banking and commerce and undermines Congressional safeguards to the detriment of consumers and the safety of the financial system.”
The groups represented include America’s Credit Unions, Americans for Financial Reform, Bank Policy Institute, Center for Responsible Lending, Consumer Federation of America, Independent Community Bankers of America, National Consumer Law Center (on behalf of its low-income clients), National Community Reinvestment Coalition and U.S. PIRG.
