WASHINGTON—Rep. Maxine Waters (D-CA), who is the ranking Democratic member of the House Financial Services Committee, is calling on the FDIC to hold at least one public hearing on an application from Social Financial, Inc.–the company better known as SoFI–to establish an Industrial Loan Company (ILC).
SoFi is a P2P lender that uses a model quite similar to credit unions, although often with rates much higher than those charged by CUs.
In the letter, Waters states said that changes in the financial services industry and financial regulation necessitate a public hearing to examine the policy and legal implications of granting federal deposit insurance to ILCs generally, as well as to obtain greater input on the unique risks posed by granting it to a fintech such as SoFi.
"Granting SoFi's application would set a precedent that a wide variety of other fintech companies may choose to follow even though concerns related to financial inclusion, consumer benefits, supervision, and regulation of such entities are still unresolved," Waters wrote. "Thus, the FDIC should carefully consider these concerns when reviewing SoFi's application, and in doing so, hold a public hearing to allow for a fuller vetting of the advantages and disadvantages of extending an outdated regulatory framework for ILCs to fintech companies, and the potential implications for the broader financial system."