PRESS RELEASE
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
July 28, 2006
Media Contact:
David Barr (202) 898-6992 or
dbarr@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-73-2006
FDIC Places Six-Month Moratorium on Industrial Loan Company
Applications and Notices
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved by
notational vote a six-month moratorium on applications for deposit insurance by Industrial Loan
Companies (ILCs), as well as on notices of change in bank control for existing ILCs. The FDIC
will not make any final decisions or accept any future applications for deposit insurance or
notices of change in control for ILCs during this period.
Recently, the growth of the ILC industry, the trend toward commercial company ownership of
ILCs and the nature of some ILC business models have raised questions about the risks of ILCs
to the deposit insurance fund, and whether their commercial relationships pose any safety and
soundness risks.
The FDIC put the moratorium in place to provide time to assess developments in the ILC
industry, to determine if any emerging safety and soundness or policy issues exist involving
ILCs, and to evaluate whether statutory, regulatory or policy changes need to be made in the
oversight of these charters. The moratorium also allows the agency time to further evaluate the
various issues, facts and arguments raised in connection with the ILC industry, and to assess
whether statutory or regulatory changes or revised standards and procedures for ILC
applications and supervision are needed to protect the deposit insurance fund.
The moratorium provides a limited exception only in the unlikely circumstances in which there is
a risk to an FDIC-insured institution or to the insurance fund, or if the mission of the FDIC is
impaired. The moratorium expires on January 31, 2007.
Currently, 61 ILCs operate in seven states. There are nine ILC applications for deposit
insurance and five notices of change in control for existing ILCs pending before the FDIC. All of
those applications and notices are subject to the moratorium.
# # #
Federal Deposit Insurance Corporation
FOR IMMEDIATE RELEASE
July 28, 2006
Media Contact:
David Barr (202) 898-6992 or
dbarr@fdic.gov
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's
banking system. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing
risks to which they are exposed. The FDIC receives no federal tax dollars — insured financial institutions fund its
operations.
FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically
(go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information
Center (877-275-3342 or 703-562-2200). PR-73-2006
FDIC Places Six-Month Moratorium on Industrial Loan Company
Applications and Notices
The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved by
notational vote a six-month moratorium on applications for deposit insurance by Industrial Loan
Companies (ILCs), as well as on notices of change in bank control for existing ILCs. The FDIC
will not make any final decisions or accept any future applications for deposit insurance or
notices of change in control for ILCs during this period.
Recently, the growth of the ILC industry, the trend toward commercial company ownership of
ILCs and the nature of some ILC business models have raised questions about the risks of ILCs
to the deposit insurance fund, and whether their commercial relationships pose any safety and
soundness risks.
The FDIC put the moratorium in place to provide time to assess developments in the ILC
industry, to determine if any emerging safety and soundness or policy issues exist involving
ILCs, and to evaluate whether statutory, regulatory or policy changes need to be made in the
oversight of these charters. The moratorium also allows the agency time to further evaluate the
various issues, facts and arguments raised in connection with the ILC industry, and to assess
whether statutory or regulatory changes or revised standards and procedures for ILC
applications and supervision are needed to protect the deposit insurance fund.
The moratorium provides a limited exception only in the unlikely circumstances in which there is
a risk to an FDIC-insured institution or to the insurance fund, or if the mission of the FDIC is
impaired. The moratorium expires on January 31, 2007.
Currently, 61 ILCs operate in seven states. There are nine ILC applications for deposit
insurance and five notices of change in control for existing ILCs pending before the FDIC. All of
those applications and notices are subject to the moratorium.
# # #