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The FDIC finalized a rule governing parent companies of industrial banks and industrial loan companies (ILCs), a charter type frequently used by fintech companies seeking banking capabilities. The rule establishes written commitments and conditions for ILC parent companies, including requirements related to capital, liquidity, and ongoing examination access. This rulemaking is significant for the BaaS ecosystem because ILC charters have been a pathway for fintech firms like Square and Nelnet to obtain FDIC-insured deposit-taking powers. The rule aims to ensure that non-bank parent entities maintain adequate oversight and do not pose undue risk to the Deposit Insurance Fund. While not an enforcement action, this rulemaking sets the supervisory framework under which fintech-affiliated ILCs operate.

Verified from source: The FDIC published a final rule (12 CFR 354) on parent companies of industrial banks and industrial loan companies, effective April 1, 2021, establishing conditions and commitments for ILC parent companies. Published in the Federal Register as Document 2020-28473 (86 FR 10703).