43482 Federal Register / Vol. 71, No. 147 / Tuesday, August 1, 2006 / Notices
1 See 12 U.S.C. 1813(a)(2), 1841(c)(2)(H).
2 If an ILC is authorized to, and does, in fact, offer
demand deposits, any company that owns such an
ILC may be required to register as a bank holding
company. As a result, most of the ILCs have chosen
not to offer demand deposits.
3 12 U.S.C. 1813(a)(2).
4 See 12 U.S.C. 1841(c)(2)(H).
5 During 2000, 4 new ILCs were insured; 2 during
each of 2001 and 2002; 5 during 2003; 6 during
2004; 4 during 2005; and 1 thus far in 2006. The
insurance date for each institution reflects the date
the institution began operating.
For a fee this meeting can be viewed
live over George Mason University’s
Capitol Connection. The Capitol
Connection also will carry the meeting
live via the Internet. To purchase these
services call (703) 993–3100 or go to
http://www.capitolconnection.gmu.edu.
Copies of materials adopted at this
meeting can be purchased from the
FCC’s duplicating contractor, Best Copy
and Printing, Inc. (202) 488–5300; Fax
(202) 488–5563; TTY (202) 488–5562.
These copies are available in paper
format and alternative media, including
large print/type; digital disk; and audio
and video tape. Best Copy and Printing,
Inc. may be reached by e-mail at
FCC@BCPIWEB.com.
Federal Communications Commission
Marlene H. Dortch,
Secretary.
[FR Doc. 06–6641 Filed 7–28–06; 12:31 pm]
BILLING CODE 6712 –01–M
FEDERAL DEPOSIT INSURANCE
CORPORATION
Moratorium on Certain Industrial Loan
Company Applications and Notices
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice; The Imposition of a
Moratorium.
SUMMARY: This notice announces the
imposition of a six-month moratorium
on FDIC action to accept, approve, or
deny any application for deposit
insurance submitted to the FDIC by, or
on behalf of, any proposed or existing
industrial loan company, industrial
bank or similar institution (collectively,
ILC),1 or accept, disapprove, or issue a
letter of intent not to disapprove, any
change in bank control notice submitted
to the FDIC with respect to any ILC. The
FDIC Board of Directors (Board) may
exclude from the moratorium any
particular application or notice if it
determines that the moratorium would
present a significant safety and
soundness risk to any FDIC-insured
institution or a significant risk to the
deposit insurance fund, or failure to act
would otherwise impair the mission of
the FDIC.
DATES: The moratorium is effective
through Wednesday, January 31, 2007.
FOR FURTHER INFORMATION CONTACT: For
questions regarding the moratorium:
contact Robert C. Fick, Counsel, (202)
898–8962; Federal Deposit Insurance
Corporation, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
Nature and Brief History of ILCs
ILCs were first chartered in the early
1900’s as small loan companies for
industrial workers. Over time the
chartering states have gradually
expanded the powers of their ILCs to the
extent that ILCs now generally have the
same powers as state commercial
banks.2
ILCs are state-chartered banks, and all
of the existing FDIC-insured ILCs are
‘‘state nonmember banks’’ under the FDI
Act. As a result, their primary Federal
banking supervisor is the FDIC. The
FDIC generally exercises the same
supervisory and regulatory powers over
ILCs that it does over other state non-
member banks. The only material
exceptions to the FDIC’s authority over
ILCs are that the cross-guarantee
liability provisions, the golden
parachute provisions, and the
management interlocks provisions are
not applicable to ILCs, their affiliates or
holding companies. Legislation to make
these provisions applicable to ILCs is
currently pending.
While ILCs are ‘‘banks’’ under the FDI
Act,3 they generally are not ‘‘banks’’
under the Bank Holding Company Act
(BHCA).4 One result of this difference in
treatment is that a company that owns
an ILC could engage in commercial
activities and may not be subject to
Federal consolidated supervision. By
contrast, domestic bank holding
companies and financial holding
companies that are subject to Federal
consolidated supervision are prohibited
from engaging in commercial activities.
As a result of these differences, some of
the companies that own ILCs are not
subject to Federal consolidated
supervision. The FDIC has noted a
recent increase in deposit insurance
applications for, and change in control
notices with respect to, ILCs that will be
affiliated with commercial concerns or
other companies that will not have a
Federal consolidated supervisor. Some
members of Congress, the Government
Accountability Office, the FDIC’s Office
of Inspector General, and members of
the public have expressed concerns
regarding the lack of Federal
consolidated supervision, the potential
risks from mixing banking and
commerce and the potential for an
unlevel playing field.
Summary of ILC Portfolio
The ILC industry has evolved since
the enactment of the Competitive
Equality Banking Act (CEBA) in 1987,
when Congress initially excepted ILCs
from the BHCA. As of July 24, 2006,
there were 61 operating insured ILCs; 48
of the 61 were chartered in Utah or
California. ILCs also operate in
Colorado, Hawaii, Indiana, Minnesota
and Nevada.
As of year-end 1987, 105 ILCs
reported aggregate total assets of $4.2
billion and aggregate total deposits of
$2.9 billion. The reported total assets for
these ILCs ranged from $1.0 million to
$411.9 million, with the average ILC
reporting $40.0 million in total assets
and $27.3 million in total deposits. Of
the current portfolio of 61 ILCs, 14 were
insured during 1987 or prior years.
As of year-end 1999, the FDIC insured
55 ILCs with aggregate total assets of
$43.6 billion and aggregate total
deposits of $22.5 billion. The reported
total assets for these ILCs ranged from
$2.4 million to $15.6 billion, with 10
institutions reporting total assets of
more than $1 billion. The four largest
institutions reported total assets of $15.6
billion, $4.4 billion, $3.8 billion, and
$3.0 billion. Six other institutions
reported total assets of $1.1 billion to
$2.5 billion. The remaining portfolio of
ILCs, on average, reported total assets of
$152.5 million. Of the current portfolio
of 61 ILCs, 37 were insured during 1999
or prior years.
Since January 1, 2000, 24 ILCs became
insured.5 As of March 31, 2006, the 61
insured ILCs reported aggregate total
assets of $155.1 billion; ILCs owned by
four financial services firms, including
Merrill Lynch & Co. Inc.; UBS AG,
Lehman Brothers Holdings, Inc.; and
Morgan Stanley, accounted for 63
percent of the growth in ILC assets since
1987. These four firms all operate under
some form of consolidated supervision
by the Federal Reserve Board (FRB), the
Office of Thrift Supervision (OTS) or the
Securities and Exchange Commission
(SEC) account for 61.4% of the total ILC
industry assets as of March 31, 2006.
Reported total assets of all ILCs, as of
March 31, 2006, ranged from $2.7
million to $62.0 billion. ILCs reporting
total assets of $10 billion or more
include Merrill Lynch Bank USA ($62.0
billion), UBS Bank USA ($19.0 billion),
American Express Centurion Bank
($13.8 billion), Fremont Investment &
Loan ($12.9 billion), and Morgan
VerDate Aug<31>2005 20:04 Jul 31, 2006 Jkt 208001 PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1
rwilkins on PROD1PC63 with NOTICES
1 See 12 U.S.C. 1813(a)(2), 1841(c)(2)(H).
2 If an ILC is authorized to, and does, in fact, offer
demand deposits, any company that owns such an
ILC may be required to register as a bank holding
company. As a result, most of the ILCs have chosen
not to offer demand deposits.
3 12 U.S.C. 1813(a)(2).
4 See 12 U.S.C. 1841(c)(2)(H).
5 During 2000, 4 new ILCs were insured; 2 during
each of 2001 and 2002; 5 during 2003; 6 during
2004; 4 during 2005; and 1 thus far in 2006. The
insurance date for each institution reflects the date
the institution began operating.
For a fee this meeting can be viewed
live over George Mason University’s
Capitol Connection. The Capitol
Connection also will carry the meeting
live via the Internet. To purchase these
services call (703) 993–3100 or go to
http://www.capitolconnection.gmu.edu.
Copies of materials adopted at this
meeting can be purchased from the
FCC’s duplicating contractor, Best Copy
and Printing, Inc. (202) 488–5300; Fax
(202) 488–5563; TTY (202) 488–5562.
These copies are available in paper
format and alternative media, including
large print/type; digital disk; and audio
and video tape. Best Copy and Printing,
Inc. may be reached by e-mail at
FCC@BCPIWEB.com.
Federal Communications Commission
Marlene H. Dortch,
Secretary.
[FR Doc. 06–6641 Filed 7–28–06; 12:31 pm]
BILLING CODE 6712 –01–M
FEDERAL DEPOSIT INSURANCE
CORPORATION
Moratorium on Certain Industrial Loan
Company Applications and Notices
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Notice; The Imposition of a
Moratorium.
SUMMARY: This notice announces the
imposition of a six-month moratorium
on FDIC action to accept, approve, or
deny any application for deposit
insurance submitted to the FDIC by, or
on behalf of, any proposed or existing
industrial loan company, industrial
bank or similar institution (collectively,
ILC),1 or accept, disapprove, or issue a
letter of intent not to disapprove, any
change in bank control notice submitted
to the FDIC with respect to any ILC. The
FDIC Board of Directors (Board) may
exclude from the moratorium any
particular application or notice if it
determines that the moratorium would
present a significant safety and
soundness risk to any FDIC-insured
institution or a significant risk to the
deposit insurance fund, or failure to act
would otherwise impair the mission of
the FDIC.
DATES: The moratorium is effective
through Wednesday, January 31, 2007.
FOR FURTHER INFORMATION CONTACT: For
questions regarding the moratorium:
contact Robert C. Fick, Counsel, (202)
898–8962; Federal Deposit Insurance
Corporation, Washington, DC 20429.
SUPPLEMENTARY INFORMATION:
I. Background
Nature and Brief History of ILCs
ILCs were first chartered in the early
1900’s as small loan companies for
industrial workers. Over time the
chartering states have gradually
expanded the powers of their ILCs to the
extent that ILCs now generally have the
same powers as state commercial
banks.2
ILCs are state-chartered banks, and all
of the existing FDIC-insured ILCs are
‘‘state nonmember banks’’ under the FDI
Act. As a result, their primary Federal
banking supervisor is the FDIC. The
FDIC generally exercises the same
supervisory and regulatory powers over
ILCs that it does over other state non-
member banks. The only material
exceptions to the FDIC’s authority over
ILCs are that the cross-guarantee
liability provisions, the golden
parachute provisions, and the
management interlocks provisions are
not applicable to ILCs, their affiliates or
holding companies. Legislation to make
these provisions applicable to ILCs is
currently pending.
While ILCs are ‘‘banks’’ under the FDI
Act,3 they generally are not ‘‘banks’’
under the Bank Holding Company Act
(BHCA).4 One result of this difference in
treatment is that a company that owns
an ILC could engage in commercial
activities and may not be subject to
Federal consolidated supervision. By
contrast, domestic bank holding
companies and financial holding
companies that are subject to Federal
consolidated supervision are prohibited
from engaging in commercial activities.
As a result of these differences, some of
the companies that own ILCs are not
subject to Federal consolidated
supervision. The FDIC has noted a
recent increase in deposit insurance
applications for, and change in control
notices with respect to, ILCs that will be
affiliated with commercial concerns or
other companies that will not have a
Federal consolidated supervisor. Some
members of Congress, the Government
Accountability Office, the FDIC’s Office
of Inspector General, and members of
the public have expressed concerns
regarding the lack of Federal
consolidated supervision, the potential
risks from mixing banking and
commerce and the potential for an
unlevel playing field.
Summary of ILC Portfolio
The ILC industry has evolved since
the enactment of the Competitive
Equality Banking Act (CEBA) in 1987,
when Congress initially excepted ILCs
from the BHCA. As of July 24, 2006,
there were 61 operating insured ILCs; 48
of the 61 were chartered in Utah or
California. ILCs also operate in
Colorado, Hawaii, Indiana, Minnesota
and Nevada.
As of year-end 1987, 105 ILCs
reported aggregate total assets of $4.2
billion and aggregate total deposits of
$2.9 billion. The reported total assets for
these ILCs ranged from $1.0 million to
$411.9 million, with the average ILC
reporting $40.0 million in total assets
and $27.3 million in total deposits. Of
the current portfolio of 61 ILCs, 14 were
insured during 1987 or prior years.
As of year-end 1999, the FDIC insured
55 ILCs with aggregate total assets of
$43.6 billion and aggregate total
deposits of $22.5 billion. The reported
total assets for these ILCs ranged from
$2.4 million to $15.6 billion, with 10
institutions reporting total assets of
more than $1 billion. The four largest
institutions reported total assets of $15.6
billion, $4.4 billion, $3.8 billion, and
$3.0 billion. Six other institutions
reported total assets of $1.1 billion to
$2.5 billion. The remaining portfolio of
ILCs, on average, reported total assets of
$152.5 million. Of the current portfolio
of 61 ILCs, 37 were insured during 1999
or prior years.
Since January 1, 2000, 24 ILCs became
insured.5 As of March 31, 2006, the 61
insured ILCs reported aggregate total
assets of $155.1 billion; ILCs owned by
four financial services firms, including
Merrill Lynch & Co. Inc.; UBS AG,
Lehman Brothers Holdings, Inc.; and
Morgan Stanley, accounted for 63
percent of the growth in ILC assets since
1987. These four firms all operate under
some form of consolidated supervision
by the Federal Reserve Board (FRB), the
Office of Thrift Supervision (OTS) or the
Securities and Exchange Commission
(SEC) account for 61.4% of the total ILC
industry assets as of March 31, 2006.
Reported total assets of all ILCs, as of
March 31, 2006, ranged from $2.7
million to $62.0 billion. ILCs reporting
total assets of $10 billion or more
include Merrill Lynch Bank USA ($62.0
billion), UBS Bank USA ($19.0 billion),
American Express Centurion Bank
($13.8 billion), Fremont Investment &
Loan ($12.9 billion), and Morgan
VerDate Aug<31>2005 20:04 Jul 31, 2006 Jkt 208001 PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1
rwilkins on PROD1PC63 with NOTICES
43483Federal Register / Vol. 71, No. 147 / Tuesday, August 1, 2006 / Notices
6 See n.1 supra.
7 U.S. Government Accountability Office, GAO–
05–621, Industrial Loan Corporations: Recent Asset
Growth And Commercial Interest Highlight
Differences In Regulatory Authority (2005),
available at http://www.gao.gov/highlights/
d05621high.pdf (hereinafter GAO–05–621).
Stanley Bank ($10.9 billion); 9 other
ILCs reported total assets of $1 billion
or more. The remaining 47 institutions,
on average, reported total assets of
$223.6 million.
While many of the ILCs insured after
CEBA are subject to some form of
consolidated supervision, many of the
recent applications are from companies
that would have no consolidated
Federal supervisor. Currently, nine
applications for deposit insurance for
ILCs are pending before the FDIC. The
FDIC has also received five notices of
change in bank control to acquire an
ILC. None of the potential parent
companies of the current ILC applicants
or the potential acquirers of ILCs will be
subject to Federal consolidated
supervision.
II. Recent Developments and
Expressions of Concern
The ILC industry has grown and
evolved since its inception in 1910, and
that growth and evolution appears to be
continuing in ways that may not have
been anticipated at the time CEBA was
enacted in 1987 and even at the time
that the Gramm-Leach-Bliley Act
(GLBA) was enacted in 1999, when
Congress last addressed the issue of
mixing banking and commerce. Over
time the chartering states have gradually
expanded the powers of their ILCs to the
extent that ILCs now generally have the
same powers as state commercial
banks.6 That fact, coupled with the
ability of a company that controls an
ILC to possibly engage in activities not
permissible for a Federally-supervised
holding company, has attracted the
interest of a wide range of potential
owners. For some of these companies,
the ILC charter was the only way the
company could own a bank. Some of
these companies plan to use an ILC to
support their non-financial activities;
others plan to use an ILC to augment the
services of their financial services units.
In 2005 the GAO issued a report that
concluded that while ‘‘from an
operations standpoint [ILCs] do not
appear to have a greater risk of failure
than other types of depository
institutions,’’ 7 commercial firm
ownership of ILCs constituted a mixing
of banking and commerce and created
an unlevel playing field when compared
to the holding companies of banks and
thrifts subject to consolidated
supervision, and that the FDIC’s
examination, regulation and supervision
authorities may not adequately protect
the bank and the insurance fund when
an ILC is held by a commercial firm.
Previously, the FDIC’s OIG had issued a
2004 report expressing a concern that
ILCs may present additional risks to the
deposit insurance fund because the
parent holding companies of ILCs are
not always subject to consolidated
supervision, consolidated capital
requirements, or enforcement actions
imposed on parent organizations subject
to the BHCA.
The FDIC also received more than
13,000 comment letters and heard
substantial testimony in three days of
hearings on the proposed Wal-Mart
Bank’s deposit insurance application.
Most of the comments and testimony
expressed opposition to the granting of
deposit insurance to this particular
applicant. As of June 30, 2006 over 640
of those comments specifically raised
concerns over the risk to the deposit
insurance fund posed by an ILC that has
a parent without a consolidated Federal
supervisor or in which an ILC is owned
or affiliated with a commercial concern.
Recently, numerous members of
Congress have expressed their concerns
about ILCs in comments on applications
and notices pending before the FDIC, in
recent Congressional hearings on ILCs,
and by introducing a number of bills
affecting ILCs.
III. Need for a Moratorium
From a safety and soundness
standpoint, ILCs have not presented the
FDIC thus far with any greater risk of
failure than other types of insured
depository institutions and the FDIC’s
current statutory authority has proved
adequate to supervise ILCs. However, as
a result of the continued evolution of
the ILC industry and the various issues
and concerns expressed regarding the
ILC industry mentioned above, it is
appropriate for the FDIC to further
evaluate (i) industry developments, (ii)
the various issues, facts, and arguments
raised with respect to the ILC industry,
(iii) whether there are emerging safety
and soundness issues or policy issues
involving ILCs or other risks to the
insurance fund, and (iv) whether
statutory, regulatory, or policy changes
should be made in the FDIC’s oversight
of ILCs in order to protect the deposit
insurance fund or important
Congressional objectives.
IV. The Moratorium
The FDIC has imposed a six-month
moratorium on FDIC action to (i) accept,
approve, or deny any application for
deposit insurance submitted to the FDIC
by, or on behalf of, any proposed or
existing ILC, or (ii) accept, disapprove,
or issue a letter of intent not to
disapprove, any change in bank control
notice submitted to the FDIC with
respect to any ILC. The FDIC Board of
Directors may exclude from the
moratorium any particular application
or notice if it determines that (i) the
moratorium would present a significant
safety and soundness risk to any FDIC-
insured institution or a significant risk
to the deposit insurance fund, or (ii)
failure to act would otherwise impair
the mission of the FDIC.
During the moratorium, the FDIC will
not ‘‘accept’’ applications for deposit
insurance for any ILC or notices of
change in control with respect to any
ILC, regardless of whether the
application or notice is substantially
complete. The moratorium includes all
pending ILC applications for deposit
insurance and notices of change in
control with respect to an ILC in order
to maintain the status quo. In that way
the FDIC would be able to focus
carefully and comprehensively on
further evaluating the developments,
facts, issues, and arguments mentioned
above, and to ensure that no new ILCs
will be insured and no new changes in
control will be permitted that would be
inconsistent with the FDIC’s findings
and conclusions.
During the moratorium, all ILC
applications and notices other than
those subject to the moratorium will be
acted upon only by the FDIC’s Board of
Directors.
Finally, it is expected that during the
moratorium the FDIC will seek public
input on the issues and concerns raised
with regard to the ILC industry.
Imposition of a limited-duration
moratorium at this time is necessary to
insure that the FDIC achieves and
preserves the broad statutory objectives
of the FDI Act which include
maintenance of public confidence in the
banking system by insuring deposits
and maintaining the safety and
soundness of insured depository
institutions. The FDIC recognizes that
the moratorium may appear inconsistent
with specific timetables for agency
action on certain applications or
notices. However, adherence to a strict
statutory timeline without an
opportunity to re-evaluate the FDIC’s
standards for determining the public
interest may frustrate the substantive
policies the agency is charged with
promoting.
The moratorium will not implement
any new standards for any regulatory
approvals, but rather will seek to
maintain the status quo while the FDIC
evaluates its standards in light of its
VerDate Aug<31>2005 20:04 Jul 31, 2006 Jkt 208001 PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1
rwilkins on PROD1PC63 with NOTICES
6 See n.1 supra.
7 U.S. Government Accountability Office, GAO–
05–621, Industrial Loan Corporations: Recent Asset
Growth And Commercial Interest Highlight
Differences In Regulatory Authority (2005),
available at http://www.gao.gov/highlights/
d05621high.pdf (hereinafter GAO–05–621).
Stanley Bank ($10.9 billion); 9 other
ILCs reported total assets of $1 billion
or more. The remaining 47 institutions,
on average, reported total assets of
$223.6 million.
While many of the ILCs insured after
CEBA are subject to some form of
consolidated supervision, many of the
recent applications are from companies
that would have no consolidated
Federal supervisor. Currently, nine
applications for deposit insurance for
ILCs are pending before the FDIC. The
FDIC has also received five notices of
change in bank control to acquire an
ILC. None of the potential parent
companies of the current ILC applicants
or the potential acquirers of ILCs will be
subject to Federal consolidated
supervision.
II. Recent Developments and
Expressions of Concern
The ILC industry has grown and
evolved since its inception in 1910, and
that growth and evolution appears to be
continuing in ways that may not have
been anticipated at the time CEBA was
enacted in 1987 and even at the time
that the Gramm-Leach-Bliley Act
(GLBA) was enacted in 1999, when
Congress last addressed the issue of
mixing banking and commerce. Over
time the chartering states have gradually
expanded the powers of their ILCs to the
extent that ILCs now generally have the
same powers as state commercial
banks.6 That fact, coupled with the
ability of a company that controls an
ILC to possibly engage in activities not
permissible for a Federally-supervised
holding company, has attracted the
interest of a wide range of potential
owners. For some of these companies,
the ILC charter was the only way the
company could own a bank. Some of
these companies plan to use an ILC to
support their non-financial activities;
others plan to use an ILC to augment the
services of their financial services units.
In 2005 the GAO issued a report that
concluded that while ‘‘from an
operations standpoint [ILCs] do not
appear to have a greater risk of failure
than other types of depository
institutions,’’ 7 commercial firm
ownership of ILCs constituted a mixing
of banking and commerce and created
an unlevel playing field when compared
to the holding companies of banks and
thrifts subject to consolidated
supervision, and that the FDIC’s
examination, regulation and supervision
authorities may not adequately protect
the bank and the insurance fund when
an ILC is held by a commercial firm.
Previously, the FDIC’s OIG had issued a
2004 report expressing a concern that
ILCs may present additional risks to the
deposit insurance fund because the
parent holding companies of ILCs are
not always subject to consolidated
supervision, consolidated capital
requirements, or enforcement actions
imposed on parent organizations subject
to the BHCA.
The FDIC also received more than
13,000 comment letters and heard
substantial testimony in three days of
hearings on the proposed Wal-Mart
Bank’s deposit insurance application.
Most of the comments and testimony
expressed opposition to the granting of
deposit insurance to this particular
applicant. As of June 30, 2006 over 640
of those comments specifically raised
concerns over the risk to the deposit
insurance fund posed by an ILC that has
a parent without a consolidated Federal
supervisor or in which an ILC is owned
or affiliated with a commercial concern.
Recently, numerous members of
Congress have expressed their concerns
about ILCs in comments on applications
and notices pending before the FDIC, in
recent Congressional hearings on ILCs,
and by introducing a number of bills
affecting ILCs.
III. Need for a Moratorium
From a safety and soundness
standpoint, ILCs have not presented the
FDIC thus far with any greater risk of
failure than other types of insured
depository institutions and the FDIC’s
current statutory authority has proved
adequate to supervise ILCs. However, as
a result of the continued evolution of
the ILC industry and the various issues
and concerns expressed regarding the
ILC industry mentioned above, it is
appropriate for the FDIC to further
evaluate (i) industry developments, (ii)
the various issues, facts, and arguments
raised with respect to the ILC industry,
(iii) whether there are emerging safety
and soundness issues or policy issues
involving ILCs or other risks to the
insurance fund, and (iv) whether
statutory, regulatory, or policy changes
should be made in the FDIC’s oversight
of ILCs in order to protect the deposit
insurance fund or important
Congressional objectives.
IV. The Moratorium
The FDIC has imposed a six-month
moratorium on FDIC action to (i) accept,
approve, or deny any application for
deposit insurance submitted to the FDIC
by, or on behalf of, any proposed or
existing ILC, or (ii) accept, disapprove,
or issue a letter of intent not to
disapprove, any change in bank control
notice submitted to the FDIC with
respect to any ILC. The FDIC Board of
Directors may exclude from the
moratorium any particular application
or notice if it determines that (i) the
moratorium would present a significant
safety and soundness risk to any FDIC-
insured institution or a significant risk
to the deposit insurance fund, or (ii)
failure to act would otherwise impair
the mission of the FDIC.
During the moratorium, the FDIC will
not ‘‘accept’’ applications for deposit
insurance for any ILC or notices of
change in control with respect to any
ILC, regardless of whether the
application or notice is substantially
complete. The moratorium includes all
pending ILC applications for deposit
insurance and notices of change in
control with respect to an ILC in order
to maintain the status quo. In that way
the FDIC would be able to focus
carefully and comprehensively on
further evaluating the developments,
facts, issues, and arguments mentioned
above, and to ensure that no new ILCs
will be insured and no new changes in
control will be permitted that would be
inconsistent with the FDIC’s findings
and conclusions.
During the moratorium, all ILC
applications and notices other than
those subject to the moratorium will be
acted upon only by the FDIC’s Board of
Directors.
Finally, it is expected that during the
moratorium the FDIC will seek public
input on the issues and concerns raised
with regard to the ILC industry.
Imposition of a limited-duration
moratorium at this time is necessary to
insure that the FDIC achieves and
preserves the broad statutory objectives
of the FDI Act which include
maintenance of public confidence in the
banking system by insuring deposits
and maintaining the safety and
soundness of insured depository
institutions. The FDIC recognizes that
the moratorium may appear inconsistent
with specific timetables for agency
action on certain applications or
notices. However, adherence to a strict
statutory timeline without an
opportunity to re-evaluate the FDIC’s
standards for determining the public
interest may frustrate the substantive
policies the agency is charged with
promoting.
The moratorium will not implement
any new standards for any regulatory
approvals, but rather will seek to
maintain the status quo while the FDIC
evaluates its standards in light of its
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rwilkins on PROD1PC63 with NOTICES