The bank group also demand that FDIC to impose an immediate two-year moratorium on ILC (Industrial Loan Corporation) deposit-insurance applications. ICBA claims that licensing Square as an ILC creates an uneven playing ground for other establishes banks, including community bankCs.
The banking group pointed out in a letter that this would allow Square to bypass legal prohibitions and restrictions under the Bank Holding Company Act. The group said that the payments company should be “subject to the same restrictions and supervision that any other bank holding company of a community bank is subject to”.
ICBA urges Congress to “close the ILC loophole”, arguing that their recommendations would “promote safety and soundness in the commercial banking sector and maintain the separation of banking and commerce.”
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