The Independent Community Bankers of America (ICBA) recently forwarded correspondence to the Federal Deposit Insurance Corporation (FDIC), encouraging the agency to reject the application of Ford Credit Bank.
The ICBA maintains the approval would enable skirting of regulatory oversight while violating established policy separating banking and commerce.
“While ICBA and community bankers continue calling on Congress to close the industrial loan company loophole, Ford’s application to form a new ILC that lacks consolidated oversight would only put the Deposit Insurance Fund and consumers at greater risk,” ICBA President and CEO Rebeca Romero Rainey said. “Any company that wishes to own a full-service bank should be subject to the same restrictions and supervision that apply to any other bank holding company.”
The ICBA said the approval of the Ford Credit Bank application would create outsized risks to the Deposit Insurance Fund (DIF) and Ford itself.
Additionally, the ICBA said the approval would present a conflict of interest, with Ford pressuring its bank to lower underwriting standards and make risky loans; more bailouts in the wake of General Motors’s failed incursion into banking, leading to the collapse of GMAC; and consumer harm via restricted assessment of auto lending service to low- and moderate-income customers.