House Nixes Commercial Acquisition of ILCs

The House has passed a bill that prohibits commercial firms, such as WalMart and Home Depot, from gaining control of state-chartered industrial loan companies and entering the banking business.The bill (H.R. 698), passed by a 371-16 vote, also restricts ILCs currently owned by commercial firms from branching across state lines. "This bill will preserve the distinction between banking and commerce that is necessary to protect the integrity of the banking system," said House Financial Services Committee Chairman Barney Frank, D-Mass. "I hope to work with the Senate to forge a compromise bill that the president can sign." But it does not appear that the Senate Banking Committee will act on an ILC bill soon. The Federal Deposit Insurance Corp. has imposed a moratorium on ILC applications to give Congress time to address the issue.