Watch this FDIC development

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According to Bloomberg, Amazon, Facebook, Walmart and other corporate giants may soon give Wall Street a run for its money as a key U.S. regulator smooths the path for nonbanks to get into lending.

Questions:

  1. Why is the banking industry against this? List at least two reasons.
  2. What is the loophole that the article talks about?
  3. This new slippery slope to allow industrial loan companies (ILCs) began with conditional deposit-insurance approval for mobile payments firm Square Inc. and student lender Nelnet Inc. Now, what is the new major test case for a non-financial firm to break down the traditional barrier between banking and commerce?
  4. Explain the three parts of Steve Hall’s statement as legal counsel advocating for tougher financial rules objection against ILCs: “(A) Those combinations cannot be adequately supervised, (B) they pose instability risks, and (C) they can even foster unfair competition.”

Source:

Hamilton, J. (2020). FDIC eases path for Amazon and Facebook to become lenders. BenefitsPro.com, Dec. 22 (Retrievable at FDIC eases path for Amazon and Facebook to become lenders | BenefitsPRO)