Banks, Credit Unions and Consumer Groups Support ‘Close the Shadow Banking Loophole Act’

Washington, D.C. – A coalition of leading banks, credit unions and consumer organizations today endorsed legislation to close the industrial loan company loophole. This 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 “Close the Shadow Banking Loophole Act,” introduced by Senators 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.

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.

To access a copy of the letter of support, please click here.

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About Bank Policy Institute.

The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud, and other information security issues.

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Austin Anton

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