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November, No. 244a

Acquisitions of industrial loan corporations by commercial firms have renewed the debate over the separation between banking and commerce in the U.S. On May 16–18, 2007, policymakers and academics weighed in on this debate during the Chicago Fed’s 43rd annual Conference on Bank Structure and Competition.

Last Updated: 10/18/2007

The Mixing of Banking and Commerce: A Conference Summary

Nisreen H. Darwish, Douglas D. Evanoff

Recent efforts by Wal-Mart, Home Depot and other commercial firms to acquire industrial loan corporations (ILCs), which are insured by the Federal Deposit Insurance Corporation (FDIC), have focused attention on ILCs in particular and the mixing of banking and commerce in general. Various interest groups, including community activists, labor unions and business groups, and some members of Congress opposed those ILC applications. In response, in July 2006 the FDIC announced a six-month moratorium on all ILC applications. It extended the moratorium an additional year for nonfinancial firms in January 2007 and encouraged Congress to address the issue through legislation.