financial institution
Financial institutions, otherwise known as banking institutions, are corporation
A corporation is an organization—usually a group of people or a company—authorized by the State (polity), state to act as a single entity (a legal entit ...
in the United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
that lends money, and may be owned by non-financial institutions. They provide niche financial services nationwide. ILCs offer FDIC
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that provide deposit insurance to depositors in U.S. depository institutions, the other being the National Credit Union Administration, which regulates and insures credit u ...
-insured deposits and are subject to FDIC and state regulator oversight. All "FDIC-insured entities are subject to Sections 23A and 23B of the Federal Reserve Act
The Federal Reserve Act was passed by the 63rd United States Congress
The 63rd United States Congress was a meeting of the legislative branch of the United States federal government, composed of the United States Senate
The United State ...
, which limits bank transactions with affiliates, including the non-bank parent company." ILCs are permitted to have branches in multiple states (which is permitted by many states on a reciprocal basis). They are regulated and supervised by state-charters and insured by the Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance
Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from los ...
. They are authorized to make consumer and commercial loans and accept federally insured deposits. Banks may not accept demand deposits if the bank has total assets greater than $100 million. ILCs are exempted from the Bank Holding Company Act
The Bank Holding Company Act of 1956 (, ''et seq.'') is a United States Act of Congress that regulates the actions of bank holding companies.
The original law (subsequently amended), specified that the Federal Reserve Board of Governors must approv ...
.
ILCs assist numerous charities and provide millions of dollars annually in grants, low interest loans, and service through the Community Reinvestment Act (CRA). Currently, only seven states offer an ILC bank charter. Most ILCs have been chartered by the Utah Department of Financial Institutions. Other states permitting ILCs include California
California is a state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* The State (newspaper), ''The State'' (newspaper), a daily newspaper i ...
, Colorado
Colorado (, other variants) is a state in the Mountain West
The Mountain West Conference (MW) is one of the collegiate athletic conferences affiliated with the National Collegiate Athletic Association
The National Collegiate Athletic ...
, Minnesota
Minnesota () is a state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* The State (newspaper), ''The State'' (newspaper), a daily newspaper ...
, Indiana
Indiana () is a U.S. state in the Midwestern United States, Midwestern United States. It is the List of U.S. states and territories by area, 38th-largest by area and the List of U.S. states and territories by population, 17th-most populous o ...
, Hawaii
Hawaii ( ; haw, Hawaii or ) is a state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* The State (newspaper), ''The State'' (newspape ...
, and Nevada
Nevada (, ) is a state
State may refer to:
Arts, entertainment, and media Literature
* ''State Magazine'', a monthly magazine published by the U.S. Department of State
* The State (newspaper), ''The State'' (newspaper), a daily newspaper i ...
.
Origins of the concept
In 1910, attorney Arthur J. Morris (1881–1973) opened the Fidelity Savings and Trust Company in Norfolk, Virginia, which made small loans to working people under a concept he called the "Morris Plan". Under this lending approach, would-be borrowers had to submit references from two people of like character and earning-power to prove the borrower's creditworthiness, and agreed to repay the loan through the purchase of Installment Thrift Certificates in weekly installments equal to the face value of the loan, less origination and investigative fees. Morris Plan Banks expanded to more than 100 locations in the United States. Morris Plan banks pioneered the use of automotive financing (through arrangements between the Morris Plan Company of America, essentially a holding company for Morris Plan banks, and the Studebaker Corporation), and, through the subsidiary Morris Plan Insurance Society, credit life insurance (which provided for the loan to be repaid in case the borrower died during the term of the loan, with any residue going to the borrower's estate).References
{{ReflistCiting Risks, U.S. Seeks New Rules for Niche Banks ''New York Times'' September 16, 2009
Bank On It - Thanks to luck and a loophole, Utah is an unlikely hub for the nation's industrial banks ''Salt Lake City Weekly'' April 22, 2015
External links
Financial Reports of Industrial Loan Companies. iBanknet.com
- List of largest Industrial loan companies
* [http://www.fdic.gov/regulations/examinations/supervisory/insights/sisum04/industrial_loans.html The FDIC's Supervision of Industrial Loan Companies: A Historical Perspective. June 25, 2004]
Industrial Loan Companies Come Out of the Shadows. Federal Reserve Bank of St. Louis July 2007
INDUSTRIAL LOAN CORPORATIONS: Recent Asset Growth and Commercial Interest Highlight Differences in Regulatory Authority. United States Government Accountability Office (GAO).
Financial services in the United States Loans