NAR to FDIC: Extending ILC Moratorium is a Sound Decision

To FDIC Chairman Sheila Bair, Combs wrote “We are pleased that you accepted the key elements of the recommendation by many members of Congress, NAR, and others to extend the moratorium to give Congress more time to consider whether to eliminate or tighten the existing ILC loophole that permits commercial businesses to own federally insured depository institutions.” NAR has strongly opposed FDIC approval of applications by commercial firms to own ILCs, including Wal-Mart and Home Depot.

“When commercial firms are allowed to engage in banking, the bank functions under an inherent and irreconcilable conflict of interest. These risks impose unnecessary risks to the financial system of the bank, the parent corporation, and the national economy,” said Combs.

NAR once again expressed its support for the Industrial Bank Holding Company Act of 2007 (H.R. 698) that was reintroduced by Rep. Paul Gillmor (R-Ohio) and House Financial Services Chairman Barney Frank (D-Mass.) on Monday. The bill would maintain the necessary historic separation between banking and commerce by prohibiting commercial firms from chartering or acquiring an ILC.

NAR urged the FDIC to proceed cautiously, “in light of the important public policy issue at stake, and continue to take into account the strong views of all those concerned.” Realtors®  are concerned about the competitive impact of giving large commercial businesses the benefits that come with owning a federally insured bank.

At the FDIC board meeting today in Washington, the decision was made to extend the moratorium on commercial entities’ ability to acquire or start an ILC for another 12 months. However, the charter will continue and actions will be taken on financial organizations applications.

The National Association of Realtors® , “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.