FDIC Extends Moratorium on ILC Acquisitions

The Federal Deposit Insurance Corp. has extended for one year a moratorium on the acquisition of industrial loan companies by commercial firms, but opened the door to acquisitions by financial services companies.The FDIC's action prevents Wal-Mart from acquiring an FDIC-insured ILC to process payments and credit cards and eventually get into other banking and lending activities. FDIC Chairman Sheila Bair said the growth of commercial ownership of industry loan companies raises public policy questions about the separation of banking and commerce. "The moratorium will provide Congress with an opportunity to address the issue legislatively while the FDIC considers how best to respond to any safety-and-soundness issues surrounding commercial ownership under existing law," she said. House and Senate banking committee leaders, as well as the American Bankers Association and America's Community Bankers, welcomed the FDIC's decision to extend the moratorium.