House Financial Services Committee advances bill to close ILC loophole

The House Financial Services Committee advanced the Close the Industrial Loan Company (ILC) Loophole Act, which drew praise from the Credit Union National Association (CUNA) and the National Association of Federally-Insured Credit Unions (NAFCU).

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The bill, H.R. 5912, would close a loophole that allows firms to get an FDIC-insured bank charter without the regulation that comes with it. Specifically, CUNA officials said it would “prevent the further exploitation of the loophole by firms seeking to gain all of the advantages of an FDIC-insured bank charter without the concomitant supervision and regulation that Congress has established for the corporate owners of full-service insured banks.”

The House Financial Services Committee advanced the bill by a 28-25 vote. The legislation, sponsored by U.S. Reps. Chuy Garcia (D-IL) and Lance Gooden (R-TX), now goes to the full House for a vote.

NAFCU also supports its passage. NAFCU Vice President of Legislative Affairs Brad Thaler said this bill would establish a “comprehensive solution” to closing the ILC loophole.

The committee also advanced the Downpayment Toward Equity Act of 2021 (H.R. 4495). This bill would establish a down-payment assistance program to help first-generation home buyers and low-income borrowers become homeowners.

CUNA supports this legislation and encourages the committee to ensure that credit unions that serve underserved areas are explicitly eligible under the legislation.