Waters said she and other lawmakers were “concerned about the regulatory oversight of ILCs in general,” citing the need for strong consumer protection and reinvestment, and the importance of preserving the separation of the banking and commerce.

Also in March, the Independent Community Bankers of America, an industry group, said it was extremely concerned about the FDIC’s proposed regulation of industrial charters and its approval of Square and Nelnet. The organization distributed a policy document around Washington last year calling for an immediate moratorium on such approvals.

Regulatory legislation

In response to Rakuten’s request, Senator John Kennedy, R-La., Introduced legislation last year that would require the Fed to regulate ILCs and require industrial lending companies to “comply with the requirements. specified in terms of declaration, examination and ownership ”.

“It’s just a bad idea for commerce and banking to mix,” Kennedy said in November. “Not only is it unfair for community banks who have to follow different rules, it is bad for consumers.” The ICBA supports Kennedy’s bill, which has been referred to the Senate Banking Committee.

Still, Prat Vallabhaneni, a former FDIC attorney and currently partner in White & Case LLP’s banking and fintech practices, told CQ Roll Call he doubts Kennedy’s proposed legislation is gaining much traction.