Back-Door Banks Back In Reg ReliefBattle
WASHINGTON - (08/02/05) -- As lawmakers work to resolve a hostof new issues in the regulatory relief bill, one matter hasreturned they thought was resolved last year--the dispute overindustrial loan companies, so-called back-door banks. Though lastyear's Reg Relief bill was held up over efforts to limit the growthof ILCs, the recent applications by Wal-Mart Stores, the nation'sbiggest retailer, and student loan giant Sallie Mae for ILCcharters, is expected to rekindle the controversy. "This is goingto be an issue, again," one banking lobbyist told The Credit UnionJournal. Lawmakers have been trying to keep the lid on ILCs, whichhave allowed a variety of both financial and non-financialcompanies to enter the banking business, allowing them to dispenseloans and accept deposits with federal deposit insurance coverage.Utah, which has the most liberal ILC powers, has granted chartersto automakers Ford, GM, Volvo and Volkswagon, as well as retailerTarget, insurer USAA, office machine maker Pitney Bowes, andfinancial service companies Merrill Lynch, Goldman Sachs, UBS,American Express, CitiCorp, and CIT. Both Wal-Mart and Sallie Maehave applied for an ILC in Utah.