WASHINGTON--The U.S. House Committee on Financial Services has marked up a series of proposed laws, including a bill to close the industrial loan company (ILC) loophole. The legislation has the backing of both credit union trade groups.
Separately, CUNA's board met with the CFPB's leader.
According to CUNA, the ILC loophole allows big tech and other nonbank companies to offer financial products and services without complying with the safeguards and oversights required of bank holding companies. The Close the ILC Loophole Act (HR 5912) now heads to the floor for consideration by the entire House.
CUNA and NAFCU had earlier joined with Americans for Financial Reform, Bank Policy Institute, Center for Responsible Lending, Consumer Federation of America, Credit Union National Association, Independent Community Bankers of America, Mid-Size Bank Coalition of America, National Association of Federally-Insured Credit Unions, National Community Reinvestment Coalition, National Consumer Law Center and U.S. PIRG previously submitted a joint letter of support to the committee in advance of the vote.
Joint Statement Issued
Following the vote, the organizations issued a statement saying, “With today’s vote, the Committee is one step closer to strengthening the financial system by closing the ILC loophole, and we call on Congress to take up this legislation without delay. The current version of the legislation helps preserve the longstanding separation between banking and commerce and restricts Big Tech companies from circumventing existing rules by using a loophole to enter the banking system.
“This effort reflects the extraordinary bipartisan work by Representatives Jesús “Chuy” García and Lance Gooden to collaborate with stakeholders to reach a solution, and it serves as an acknowledgment that there is no justifiable reason for two similar institutions offering indistinguishable products or services to be treated differently under the law,” the statement continued. “The legislation would help eliminate legal disparities between bank holding companies and ILC parent companies by imposing consistent regulatory and supervisory expectations.”
CUNA Meets With CFPB
Separattely, CUNA’s board met via video with CFPB Director Rohit Chopra, during which CU priorities and what the Bureau might to do support credit unions in their mission to promote financial well-being for all was discussed.
According to CUNA, the discussion covered several aspects of credit unions’ service, including:
- Preserving relationship-based banking, which has long been the “hallmark” of credit unions’ service to their members, CUNA noted
- Consolidation within the financial services sector and the impact on small credit unions
- Using CFPB’s exemption authority under the Dodd-Frank Act to protect credit union members from one-size-fits-all rulemakings designed to rein in Wall Street bad actors
- Conflicts between credit unions’ statutory structure and CFPB’s proposed 1071 business lending reporting requirements
Goal to ‘Better Understand’
“We appreciate Director Chopra for taking time to engage with our movement to better understand how the Bureau’s actions affect credit unions’ ability to advance their communities and improve their members’ financial well-being,” said CUNA President/CEO Jim Nussle. “As the original consumer protectors, credit unions are eager to work with Director Chopra to right size his agency’s oversight, balancing regulatory efforts with prioritizing consumers’ needs.”