Industrial Banks and Industrial Loan Companies (ILC Parent Companies)

In March 2020, the FDIC published a proposed rule to establish a supervisory framework for parent companies of industrial loan companies and industrial banks. The proposed rule would require 'Covered Companies' to enter into written agreements with the FDIC committing to capital adequacy, liquidity maintenance, and comprehensive risk management. The rule also included restrictions on certain contracts between ILCs and their affiliates, such as loan servicing agreements, aimed at reducing risks to the deposit insurance fund. While not specifically targeting fintech third-party risk, the proposed rule's focus on affiliate service arrangements and parent company oversight has direct relevance to BaaS and fintech-bank partnership structures. The rule signaled the FDIC's intent to bring greater supervisory rigor to non-traditional bank holding structures.

Verified from source: The FDIC released a notice of proposed rulemaking requiring controlling companies ('Covered Companies') of industrial banks to agree to certain commitments and restrictions regarding capital, liquidity, risk management, and affiliate service contracts, analogous to consolidated oversight of BHCs by the Federal Reserve.